More Judgements

Home

More Judgements

2026-VIL-1197-BOM | High Court SGST

GST - Provisional attachment of bank accounts under Section 83 of CGST Act - Opinion of Commissioner and tangible material – Respondent-Dept attached the current and escrow bank accounts of the Petitioner, a payment aggregator authorised by the RBI, under Section 83 on the allegation that the Petitioner may be playing a significant role in evasion of GST by an organised online money gaming syndicate, did not cooperate in the investigation - Whether the provisional attachment of the bank accounts of petitioner under Section 83 is without jurisdiction and contrary to the mandate of the Supreme Court in Radha Krishan Industries case - HELD - The power of provisional attachment is draconian and the conditions prescribed by the statute must be strictly fulfilled. The opinion of the Commissioner must be formed on tangible material bearing on the necessity of attachment to protect the interest of the Government revenue and the orders cannot be justified through affidavits-in-reply - The impugned orders contain only vague statements which do not show any GST liability of the Petitioner, and the entire case relates to money laundering by unnamed third parties. The orders do not mention the specific transactions, the entities involved, the manner of evasion or the role of the Petitioner, and the alleged non-existent merchants are not disclosed even in the affidavit-in-reply - Section 83 permits attachment of property belonging to the taxable person or a person specified in Section 122(1A), but the order does not record that the Petitioner is such a person. The monies in the escrow account are impressed with a trust, do not belong to the Petitioner and cannot be attached under Section 83. The Petitioner dealing with government entities is not a fly by night operator. The account of a payment aggregator which is not held liable on any transaction cannot be attached to recover liabilities that may become due in the hands of third parties. There was non-application of mind and the opinion is based completely on suspicion without cogent and credible material - The provisional attachment is illegal as the tests in Radha Krishan Industries are not satisfied. The petition is allowed by quashing the attachment orders and the partial defreezing orders to the extent they continue the attachment – The writ petition is allowed [Read less]

2026-VIL-1784-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax – Classification of hiring of Transit Mixer machines for transportation of ready mix concrete as Supply of Tangible Goods Service and not Goods Transport Agency Service – Appellant-GTA provided Transit Mixer machines to a ready mix concrete company for transportation of ready mix concrete on monthly charges, with the driver, maintenance and diesel to be within the scope of the Appellant - On scrutiny of third party information, SCN was issued and the demand against hiring charges of Transit Mixer machines was confirmed by the adjudicating authority and upheld by the FAA after appropriating the tax already paid by the Appellant under transport of goods by road service - Appellant contended that the vehicles were provided for freight, that control of the vehicles was not handed over - Whether the hiring of Transit Mixer machines is a Supply of Tangible Goods Service chargeable to service tax on the full amount received or a Goods Transport Agency Service - HELD - The taxable service under Section 65(105)(zzzzj) covers supply of tangible goods for use without transferring right of possession and effective control. The test is whether the contract transferred both possession and effective control, which is a question of fact determined from the agreement and the manner of operation. Following the Hon'ble Apex Court, where substantial control remains with the contractor and is not handed over to the user, there is no transfer of the right to use the vehicles and the transaction is a service within the meaning of Section 65(105)(zzzzj). The Appellant provided the machines for transportation of ready mix concrete, and the driver, maintenance and diesel were to be undertaken by the Appellant. No evidence was submitted that the Appellant provided Goods Transport Agency Service or issued consignment notes - The case is covered by the Hon'ble Apex Court, the Appellant is liable to pay service tax on the full amount received, there is no infirmity in the impugned order - The appeal is dismissed [Read less]

2026-VIL-223-GSTAT-ERN | Tribunal SGST

GST - Refund of tax collected on air tickets cancelled during the Covid pandemic - Sufficiency of evidence under Section 54(4) of CGST Act - The Appellant-airline filed refund claims of GST collected on tickets sold mostly through IATA agents and settled through the Billing Settlement Plan, which were cancelled and the entire fare including GST was refunded to the passengers – Rejection of appeals on the ground that the Appellant failed to establish excess payment of tax or reimbursement to passengers and that a one-to-one correlation between the travel agent and the passenger was not possible - Whether the Appellant is eligible for refund of GST collected from the passengers and paid to the Department, but subsequently refunded along with the fare to the passengers on cancellation of flights due to the pandemic in terms of the order of the Supreme Court - HELD - The Appellant had submitted sample copies of air tickets, tax invoices, credit notes and the corresponding BSP files before the adjudicating authority and the FAA, which were not appreciated. The ticket number and the passenger name are common to the refund voucher, the tax invoice and the credit note, and provide an undeniable connection between the invoice and the credit note issued for refund of the fare to each passenger. The mode of payment used for purchase of the ticket is also reflected in the refund voucher - The FAA and the adjudicating authority failed to examine this visible information and rejected the refund on flimsy grounds. The entire amount including GST was refunded to the passengers, no amount was retained by the Appellant, and there is no unjust enrichment - The BSP is a trusted framework used by airlines and agents for settlement of amounts collected and of refunds on cancellation. The Appellant also filed an undertaking that no passenger had complained of non-receipt of refund. The Appellant has provided sufficient evidence that the refund of the cancelled tickets reached the respective passengers directly and that the incidence of tax was not passed on - The Appellant is eligible for the refund, the order of the FAA is set aside - The Respondent is directed to process the refund claims with applicable interest from the date of the original refund application till payment – The appeal is allowed - Refund claimed as excess payment of tax where credit notes could not be adjusted against output liability - Circular No. 137/07/2020-GST - The Appellant issued credit notes against tax invoices on cancellation of tickets, but as there were no scheduled flights and no outward supply, the credit notes could not be adjusted in the return. The Appellant therefore filed refund claims under the category of excess payment of tax in Form GST RFD-01, and the FAA held that the Appellant had wrongly claimed the refund as excess payment of tax as there was no excess payment - Whether the refund claim filed as excess payment of tax in the absence of output tax liability to adjust the credit notes is the correct procedure - HELD - The Circular clarifies that where a credit note is issued, the tax liability is to be adjusted in the return, but in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under excess payment of tax, if any, through Form GST RFD-01. The FAA did not apply the Circular in letter and spirit. The Appellant has correctly followed the procedure by claiming the refund in the present manner - The reasoning of the FAA for rejecting the appeals is not sustainable and the order of the FAA is set aside - Credit notes under Section 34(2) of CGST Act - Reversal of ITC by recipient and incidence of tax - The FAA held that the unadjusted credit notes were time-barred under Section 34(2), that the credit notes were issued to travel agents and not to passengers, and that the Appellant must ensure that the agents have reversed the ITC before reducing its GST liability - Whether the conditions of Section 34(2) were satisfied in respect of the credit notes issued during the relevant period so as to entitle the Appellant to refund - HELD - All the tickets were issued in the name of individual passengers and the transactions are B2C transactions, so that there is no question of availing ITC and subsequently reversing it. Section 34 permits a supplier to issue a credit note where tax liability is reduced due to cancellation, and the obligation of reversal lies with the recipient under Section 16(2) read with Rule 37 of the CGST Rules. The proviso requiring reversal of ITC by the recipient was inserted only with effect from 1-10-2025, and the earlier proviso restricted reduction of liability only where the incidence of tax had been passed on to any other person. The question of reversal of ITC for the relevant period therefore does not arise - The Appellant submitted a self-declaration under Rule 89(2)(l) and, having refunded the entire amount to each passenger, the question of passing the incidence of tax does not arise. The matching of credit notes in the recipient's returns would automatically trigger reversal of ITC even in respect of any B2B buyer, and the Revenue brought no such evidence. The Appellant has satisfied the conditions of Section 34(2) while issuing the credit notes - The findings of the FAA are not sustainable and set aside. [Read less]

2026-VIL-218-GSTAT-PYG | Tribunal SGST

GST - Leviability of penalty under Section 129(1)/129(3) of CGST Act, 2017 on stock transfer of goods moved without e-way bill - Appellant transferred five two-wheelers in its own loader from its godown to its showroom about 14 km away and the loader was intercepted by the Mobile Squad - Penalty under Section 129(3) was imposed for want of an e-way bill and was upheld by the FAA - Appellant contended that it was an internal stock transfer of tax-paid goods with no supply and no tax liability - Whether penalty under Section 129 can be confirmed on a registered person for transporting goods without an e-way bill when the goods are moved as a stock transfer - HELD - Rule 138(1) of the CGST Rules, 2017 applies equally to movement of goods for reasons other than supply and therefore covers an intra-city stock transfer. A delivery challan under Rule 55 does not exempt the movement from the e-way bill requirement since Rule 55(3) provides that the movement must still be declared as specified in Rule 138 - The exemption in Rule 138(14)(n) is only for movement to and from a weighbridge, and the provisos to Rule 138(3) and Rule 138(5) only relate to Part B of the e-way bill. Non-generation of the e-way bill is therefore a procedural non-compliance. However, the penalty under Section 129(1) is leviable only with reference to the tax payable on such goods. For a transaction to be a supply under Section 7 there must be two different persons between whom the sale, transfer or disposal takes place for consideration. In a stock transfer there is only one party and no consideration, hence it is not a supply, is not covered by Section 9, and no tax is payable on the goods. Once no tax is payable the penalty determined with reference to such tax is not leviable - The penalty under Section 129 is quashed, the orders of the adjudicating authority and the FAA are set aside - The appeal is allowed - Necessity of intent to evade tax for penalty under Section 129 of CGST Act, 2017 and charge of clandestine removal in stock transfer of two-wheelers - Goods were moved by Appellant from its godown to its showroom under a delivery challan but without an e-way bill - Revenue contended that statutory GST penalties do not require proof of mens rea Appellant contended that goods could not be sold out of books and that there was no deliberate intent to evade tax - Whether a charge of deliberate intent to evade tax by clandestine removal and imposition of penalty under Section 129 is warranted - HELD - Each two-wheeler is uniquely identifiable by its engine and chassis numbers, and registration with the R.T.O. and insurance require a valid tax invoice, Form 21 and Form 22, which makes a clandestine sale virtually impossible. The charge of clandestine removal is therefore unsustainable both in law and on facts - The vehicles were purchased from the manufacturer against valid tax invoices on which GST was duly paid and where the tax has already reached the State exchequer the motive to evade tax is absent. The Appellant's practice of not generating e-way bills for such transfers and its reliance on the distance-based exemptions arose from an honest misunderstanding, so there was a technical and procedural breach without mens rea - A stock transfer carrying no tax liability discloses no material from which an intent to evade tax can reasonably be inferred and mens rea remains a necessary ingredient for penalty under Section 129 - Although the law required an e-way bill to be generated, the virtual impossibility of tax evasion and the absence of fraudulent intent rule out the penal measures under Section 129, therefore the penalty is quashed - The appeal is allowed [Read less]

2026-VIL-225-GSTAT-ERN | Tribunal SGST

GST - Denial of Input Tax Credit - Excess ITC alleged on comparison of GSTR-2A with GSTR-3B head-wise - Appellant, a super distributor of mobile phones, was issued an SCN under Section 73 alleging excess ITC availed for the year 2017-18, and the demand was confirmed and upheld by the FAA. The Appellant produced an undisputed reconciliation of the latest GSTR-2A and GSTR-9 figures together with IGST credit on import of goods, showing that overall ITC available exceeded the ITC availed, with a shortfall in CGST and SGST credit that was covered by surplus IGST credit - Whether excess availment of ITC can be determined on an aggregate basis by setting off the surplus IGST credit against the shortfall in CGST and SGST credit, so as to sustain a demand under Section 73 - HELD - The facts and figures of the reconciliation, including the IGST credit on imports, were not disputed or rebutted by the Respondent. Under Section 49(5)(a), IGST credit is first utilised towards IGST and the remaining amount may be utilised towards CGST and State tax, and it is therefore the vested right of the taxpayer to use surplus IGST credit to discharge any shortfall of CGST and SGST. Following the Kerala High Court decision, which approved the principle that the electronic credit ledger is a unified pool with compartments for IGST, CGST and SGST, and which has been followed in later decisions, the jurisdictional High Court ruling is binding in keeping with judicial discipline. The shortfall in CGST and SGST credit stood absorbed by the surplus IGST credit, so that the overall credit remained in excess. The contentions on Section 16(2)(c) and Section 155 are not relevant as the SCN contained no specific allegation on them, and apart from the alleged difference between GSTR-2A and GSTR-3B the SCN disclosed no cause of action - No case of short payment of tax is made out to invoke Section 73 - The demand is set aside and the appeal is allowed - Order confirming demand under Section 73 passed without personal hearing and non-speaking order of the FAA - Appellant contended that the adjudicating authority neither afforded a personal hearing nor considered the reply to the notice in Form ASMT-10, and that the FAA upheld the order without addressing this violation - Whether the adjudication order passed without hearing and the appellate order confirming it mechanically without discussing the contentions can be sustained - HELD - It is a matter of record that the adjudicating authority did not afford a hearing to the Appellant and did not discuss the contentions in the order, which is a unilateral recital of charges. The order is null and void on this ground alone as it is passed against the principles of natural justice. The FAA recorded the contentions of the Appellant, including those on facts not rebutted by the Respondent, but did not discuss or analyse any of them and confirmed the order mechanically. The order is a non-speaking order showing total non-application of mind, in gross violation of the principles of natural justice - The impugned order in appeal is set aside in its entirety, and the appeal is allowed. [Read less]

2026-VIL-221-GSTAT-AGR | Tribunal SGST

GST - Amnesty scheme under Notification No. 53/2023-Central Tax - Pre-deposit paid through electronic credit ledger instead of electronic cash ledger - The Appellant-taxpayer filed a time-barred first appeal under Section 107 of the CGST Act availing the amnesty scheme and paid the entire pre-deposit by debiting the electronic credit ledger as the portal did not allow payment through the electronic cash ledger. The FAA registered the appeal as defective, and dismissed it as time-barred when the Appellant did not appear on the date of hearing - Whether the rejection of the first appeal as time-barred under the amnesty schem... [Read more]

2026-VIL-220-GSTAT-AGR | Tribunal SGST

GST - Input Tax Credit, Allegation of bogus supplier - Eligibility of ITC supported by documentary evidence of purchase, transportation and receipt of goods - SCN under Section 74 was issued to the Respondent-assessee on the basis of an investigation report from another State alleging that the supplier was a bogus firm engaged only in exchange of invoices, and that the Respondent had availed ITC on purchases from that supplier. The adjudicating authority confirmed tax, penalty and interest as no reply was filed, but the FAA set aside the demand and penalty - Whether ITC availed on purchases from the supplier was liable to be disallowed on the ground that the supplier was allegedly bogus and the actual movement and receipt of goods was not established - HELD - The allegation against the supplier cannot be considered in isolation from the evidence produced by the recipient, as the eligibility of ITC must be examined with reference to the statutory conditions and the facts and evidence relating to the particular transactions - The Respondent produced purchase orders, tax invoices, e-way bills, payment records, entries in the books of account and stock register, consignment documents and vehicle particulars, which establish the actual purchase, transportation and receipt of goods and refute the allegation that only invoices were procured. The registration of the supplier, which had allegedly been cancelled on the basis of the investigation, was subsequently restored by the supplier's jurisdictional authority and the Revenue did not controvert the revocation order. The revocation of the supplier's registration nullifies the allegation that the supplier is bogus or non-existent. The ratios of the High Court judgments relied upon by the Revenue do not apply to the facts of the case - Allowance of ITC is justified, the Revenue has failed to establish grounds for interference - The appeal is dismissed - Natural Justice - Additional evidence accepted by FAA - Whether acceptance of additional evidence without opportunity to adjudicating authority vitiates the appellate order - The Revenue contended that the FAA accepted additional evidence produced by the Respondent-taxpayer without affording the adjudicating authority an adequate opportunity to examine and controvert it, contrary to the principles of natural justice, while the Respondent submitted that the documents were forwarded to the adjudicating authority and a report was called for - Whether the order of the FAA allowing ITC calls for interference on the ground that additional evidence was accepted without opportunity to the Revenue - HELD - The FAA did not proceed solely on the basis of the Respondent's assertions. The record indicates that the documents produced by the Respondent were forwarded to the adjudicating authority, a report was called for, and the report submitted by the adjudicating authority was taken into consideration by the FAA. In these circumstances, the contention that the additional evidence was accepted without affording any opportunity to the Revenue does not furnish sufficient ground for setting aside the impugned order - The ground of the Revenue is rejected, the appeal is dismissed and the order of the FAA is upheld. [Read less]

2026-VIL-224-GSTAT-TVP | Tribunal SGST

GST - Input tax credit on interior work in rented showrooms - Restriction under Section 17(5)(d) of the CGST Act, 2017 and Explanation 1 thererto - Extent of capitalisation - The Appellant-retail trader availed ITC on invoices for joinery, carpentry and painting services used for setting up wooden and glass shelves in showrooms taken on rent, and the ITC was denied as restricted under Section 17(5) of the CGST Act. The Appellant produced a CA certificate stating that the expenditure was capitalised under furniture and fixtures, that GST charged on the invoices was not added to the cost of the assets, that it was accounted separately as ITC, and that no depreciation was claimed on the tax component - Whether the Appellant is entitled to ITC on the invoices or whether the credit is restricted under Section 17(5) - HELD - The services were procured for interior work of the shops used for the retail business, which is in direct relation to furtherance of business, and ITC is available under Section 16(1). Explanation 1 to Section 17(5)(c) and (d) provides that the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property - If the Appellant has not capitalised the CGST and SGST portion of the invoices in its books of accounts, it would be eligible for ITC on such additions and alterations to the shop which is its registered place of business. The GST portion of the invoices was excluded from the claim of depreciation and was not capitalised, so that it is not covered under the restricted category of Section 17(5)(d) - The Appellant is entitled to ITC on the said invoices - The order of the FAA is set aside and the appeal is allowed - Classification of supplier's services raised for the first time at appeal - Scope of SCN in ITC dispute - The Appellant availed ITC on invoices issued by the supplier for joinery and carpentry services and painting services in respect of its rented retail showrooms, and the ITC was denied under Section 17(5) - Respondent contended that the services fall under the SAC group of building completion and finishing services as classified by the supplier, whereas the Appellant contended that the services fall under interior design services - Whether the classification of services at the supplier's end can be examined at the stage of appeal in a dispute regarding availment of ITC at the recipient's end - HELD - The SCN issued by the Deputy Commissioner does not raise any dispute about the classification of services provided by the supplier. Once the classification of services at the supplier's end is not disputed, it cannot be raised at this stage when the issue is only regarding availment of ITC at the buyer's end. The Tribunal is not inclined to go into mere allegations which are beyond the scope of the SCN - The classification of services is not examined and the issue is confined to the eligibility of ITC. [Read less]

2026-VIL-1777-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Demand on the Basis of Form 26AS and Income Tax Returns and Invocation of Extended Period - Appellant, a registered person providing repair and maintenance services and goods transport agency service and filing returns, was issued a show cause notice for the extended period based on the mismatch between Form 26AS, Income Tax Returns and Service Tax Returns - Commissioner (Appeals) went through the factual details and reduced the demand substantially, and the Revenue did not appeal against the portion dropped - Appellant contended that suppression cannot be alleged against a registered person filing returns - Whether the demand confirmed on third party data without corroborative evidence and the invocation of the extended period are sustainable - HELD - The Department issued the initial notice without proper verification and investigation, purely on Form 26AS details. Mere entries in Income Tax Returns or Form 26AS cannot by themselves establish liability under the Finance Act, 1994 unless corroborated by evidence demonstrating rendition of taxable service. Mechanical reliance on income tax data without verification of the nature of receipts is impermissible - Form 26AS is maintained on a cash basis for income tax while service tax is chargeable on accrual basis. The extended period is not invokable on the basis of such data - The balance demand for the extended period is set aside, and the Appellant is to pay service tax, if any, with interest for the normal period after proper quantification - The appeal is partly allowed - Service Tax - Confirmation of Demand for Part of the Year by Proportionate Allocation of Income Not Proposed in Show Cause Notice - Commissioner (Appeals) confirmed demand for the first three months of the financial year by proportionately allocating the income, when the show cause notice had not proposed such a procedure - Whether the demand quantified by proportionate allocation without proper data can be sustained - HELD - The Commissioner (Appeals) calculated the liability without any proper data for the three months, and such a procedure was not proposed in the show cause notice - The service tax liability so confirmed is set aside, and the appeal is partly allowed [Read less]

2026-VIL-1776-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Revenue Neutrality as a Defence to Reverse Charge Liability on Manpower Recruitment or Supply Agency Service under Notification No. 30/2012-ST - Appellant, a body corporate, paid various individual service providers for manpower recruitment or supply agency services and did not pay service tax under reverse charge - Commissioner (Appeals) upheld the demand in part with interest, and Appellant contended that the demand is revenue neutral since it was entitled to Cenvat credit of the tax demanded - Revenue contended that non-payment was a loss to the exchequer and that revenue neutrality cannot excuse non-payment, as otherwise the credit chain would be obsolete - Whether the Appellant is liable to pay service tax under reverse charge notwithstanding its eligibility to Cenvat credit - HELD - Liability to service tax under Section 66A arises on the provider's taxable event and is not contingent on the recipient's entitlement to credit. Credit of tax paid under Section 68(2) arises under Rule 3(1)(vii) of the Cenvat Credit Rules, 2004 only upon payment, and Rule 4(7) read with Rule 9 makes payment the condition precedent. Credit is a concession subject to the Rules and not an accrued right. The duty liability therefore does not get extinguished because the Appellant was eligible to avail Cenvat credit. No distinction can be placed between the service receiver and the service provider for the purpose of the charging Section once responsibility is fixed under reverse charge - The Appellant is liable to pay service tax under reverse charge as recipient of the services - Extended Period of Limitation and Penalty under Section 78 of Finance Act, 1994 where Recipient Liable under Reverse Charge is Eligible to Cenvat Credit - Non-payment of tax was noticed during audit, the transactions were recorded in the books and paid through banking channel, and Appellant contended that it acted under a bona fide belief and was entitled to Cenvat credit of the tax demanded - Revenue contended that the Appellant failed to assess its liability, did not reflect correct information in the returns and suppressed material facts with intent to evade duty - Whether the extended period was validly invoked and the penalty under Section 78 is sustainable - HELD - It is a settled position of law that if the recipient of the service is liable to pay service tax and is simultaneously eligible to avail Cenvat credit of the tax paid, the extended period cannot be invoked - The invocation of the extended period is not correct and the penalty under Section 78 is set aside, while the demand for the normal period, if any, is upheld along with the penalty under Section 77, and the appeal is allowed to that extent. [Read less]

2026-VIL-1785-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Absolute confiscation of betel nuts and imposition of penalty for alleged smuggling of goods of foreign origin - Intelligence was received that two consignments of betel nuts smuggled from Myanmar through the Indo-Myanmar border and stored at a godown in Mizoram were to be transported by two trucks through the Siliguri area of West Bengal - The DRI officers intercepted both trucks and seized the betel nuts under Section 110 of the Customs Act, 1962 as liable to confiscation under Sections 111(b) and 111(d) - SCN proposed absolute confiscation of the goods under Sections 111(b) and 111(d) and penalties on the Appellants under Sections 112(a) and 112(b) - The adjudicating authority absolutely confiscated the goods and imposed penalties relying on the statements of the drivers and handymen, the test report and the statements of the consignors, which was upheld by the FAA - Whether betel nuts, being non-notified goods, can be confiscated under Section 111 and penalties imposed under Section 112 of the Customs Act, 1962 on the basis of statements and a test report without proof that the goods are of foreign origin and smuggled - HELD - The sole allegation was that the trucks intercepted far from the border were carrying betel nuts of foreign origin. The invoices showed consignors in Mizoram and consignees in West Bengal, so it cannot be merely said that the betel nuts were seized at the Indo-Myanmar border. The test report does not conclusively say that the betel nuts are of Myanmar origin since it only says that they seem to be of North East including Myanmar region, which does not mean that the goods are of Myanmar origin. Even if the goods are presumed to be of Myanmar origin, betel nuts are not notified under Section 123 of the Customs Act, 1962, therefore the burden of proving that they are smuggled lies on the Revenue. Merely on the basis of a statement, it cannot be concluded that the betel nuts are smuggled. Following the decisions of the Hon'ble High Court at Calcutta, affirmed by the Hon'ble Apex Court, and of the Tribunal and the Hon'ble High Court at Allahabad, no adverse presumption can be drawn against the Appellants for non-notified goods, suspicion however strong cannot substitute proof, and a finding based on presumption without legal or factual basis cannot be sustained. An opinion that is only suggestive and not definitive, and is not based on any scientific test to determine origin, cannot be accepted as cogent material to establish foreign origin - The Revenue failed to discharge the burden of proving that the goods are smuggled, hence the goods cannot be held liable to confiscation on the basis of assumptions and presumptions - The order of confiscation is set aside, no penalty is imposable on the Appellants and the appeals are allowed [Read less]

2026-VIL-1780-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Applicability of Sl. No. 3 of Notification No. 23/2003-C.E. to DTA clearances of Instant Tea by a 100% EOU manufactured wholly from indigenous raw materials - Appellant, a 100% EOU, cleared into the DTA Instant Tea manufactured exclusively from indigenous raw materials and availed Sl. No. 4 of the Notification - Department held that Sl. No. 4 was not available as like goods manufactured by a non-EOU were not wholly exempt or chargeable to nil rate of duty, assessed the clearances under Sl. No. 2 and confirmed differential duty with interest and penalty under Section 11AC(1)(c) of Central Excise Act, 1944 - Appellant contended that Sl. No. 3 applied and that a wrong claim of serial number cannot deny the exemption otherwise available - Whether the clearances necessarily fall under Sl. No. 2 once Sl. No. 4 is held unavailable or are governed by Sl. No. 3 - HELD - Even if Sl. No. 4 may not be applicable, the applicability of Sl. No. 2 cannot be presumed merely by elimination without examining the nature of the goods cleared, the origin of the raw materials and the conditions stipulated under the other entries. All three conditions of Sl. No. 3 are satisfied. The goods were manufactured wholly from indigenous raw materials, as verified by the Department in earlier proceedings where separate accounts were found maintained and the demand was dropped. The goods were cleared into the DTA in accordance with the Foreign Trade Policy as acknowledged by the adjudicating authority itself. Like goods manufactured by a non-EOU were neither wholly exempt nor chargeable to nil rate of duty. A procedural lapse or an initial incorrect claim cannot deny a substantive exemption. An applicant who fails to claim the correct exemption at the initial stage is not debarred or estopped from claiming it later - The Appellant is entitled to Sl. No. 3, the duty is restricted to that leviable on like goods manufactured by a non-EOU, the demand in excess is set aside, and the Appellant is liable to pay duty with interest as computable under Sl. No. 3 only within the normal period of limitation – The appeal is disposed of - Invocation of extended period of limitation under Section 11A(4) of Central Excise Act, 1944 where the Department had prior knowledge of the facts - Four SCNs were issued for DTA clearances of Instant Tea by a 100% EOU, the last being styled as a supplementary notice overlapping the earlier periods, and the extended period was invoked on the allegation of suppression of facts with intent to evade duty - Appellant contended that the facts were known to the Department through earlier proceedings, audits and the earlier SCNs - Whether the extended period of limitation is invokable - HELD - In the earlier proceedings the Department had examined the very issue of use of imported tea vis-à-vis indigenous raw materials after physical verification of the factory and records, and the demand was dropped. The subsequent SCNs were issued on the same notification and the same duty computation, and the later notice revised the quantification of the earlier notices. As held by the Hon'ble Supreme Court, where the relevant facts were already within the knowledge of the Department when an earlier SCN was issued, the same facts cannot be relied upon later to allege suppression and invoke the extended period afresh by merely reiterating the allegation. The SCNs were issued before the amendment of Section 11A by the Finance Act, 2016 which enhanced the normal period from one year to two years - The extended period of limitation is not available to Revenue and the demands raised by invoking the extended period are set aside - Imposition of penalty under Section 11AC(1)(c) of Central Excise Act, 1944 where the dispute arises from adoption of an incorrect serial number of exemption notification - Penalty equal to the duty confirmed was imposed on the Appellant, a 100% EOU, on the allegation of suppression with intent to evade payment of duty on DTA clearances - Whether the ingredients for penalty under Section 11AC(1)(c) are made out - HELD - The Department failed to bring on record any tangible evidence of fraud, collusion, wilful mis-statement or suppression of facts with intent to evade payment of duty. The dispute emanates from the adoption of an incorrect serial number of Notification No. 23/2003-C.E. while determining duty on clearances into the DTA, which is a lapse of incorrectly applying the relevant entry and not an established act of deliberate evasion. The material circumstances concerning the manufacturing operations and the use of indigenous raw materials had previously been examined by the Department. In the absence of cogent evidence of deliberate concealment, the mere adoption of an incorrect serial number cannot be elevated to wilful suppression with intent to evade duty - The requisite statutory ingredients for penalty under Section 11AC are not made out and the penalty is set aside. [Read less]

2026-VIL-1781-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Maintainability of penalty proceedings under Rule 26(2) of Central Excise Rules, 2002 against a Director of a company without issuing SCN to the company - Appellant, a Director but not the Authorised Signatory of a trading company, was penalised under Rule 26(2) for the company's alleged availment and passing on of CENVAT credit on paper transactions without receipt of goods - SCN was issued to the Appellant for penalty but not to the company - The adjudicating authority confirmed the penalty in the de novo order after the matter was remanded by the Tribunal - Appellant contended that the proceedings against him without issuing SCN to the company are not maintainable in law - Whether penalty can be imposed on the Director without issuing SCN to the company - HELD - It is an admitted fact that proceedings were initiated against the Appellant for imposition of penalty without any SCN to the company. The other Director was the Authorised Signatory of the company and the Appellant was not. Penalty cannot be imposed on the Director for the alleged offence of the company without making the company a party - The proceedings initiated against the Appellant without issuing notice to the company are legally not sustainable and the penalty is set aside - Imposition of penalty under Rule 26(2) of Central Excise Rules, 2002 for issue of invoices without supply of goods - Appellant, a Director of a trading company, was penalised for facilitating passing on of CENVAT credit to buyers on 57 consignments of M.S. items allegedly received only through invoices from a supplier found to have no infrastructure for manufacturing M.S. items - The Department relied on the supplier's lack of infrastructure and on the reversal of credit by the buyers - Appellant contended that he did not issue any invoice without supply of goods and that the supplier was a registered manufacturer from whom goods were procured through brokers - Whether penalty is imposable under Rule 26(2) in absence of a finding that the Appellant issued invoices without delivery of goods - HELD - Penalty under Rule 26(2) can be imposed only when a person is found to issue invoices without supply of the underlying goods or abets in making such invoices. There is no finding in the impugned order that the Appellant issued any invoice without supply of goods to facilitate others in taking CENVAT credit, and no evidence of connivance or abetment by him. The Director was not the beneficiary of the credit passed on. Reversal of credit by the buyers under compulsion has no impact on the Appellant's company and cannot be taken as an admission of passing on irregular credit. The supplier not having sufficient infrastructure cannot lead to an inference that the company did not receive the goods and passed on credit through paper only - The penalty imposed under Rule 26(2) is set aside - Evidentiary value of statements of truck owners where the procedure under Section 9D of the Central Excise Act, 1944 is not followed - The adjudicating authority relied on the statements of some truck owners to sustain the allegation of supply of invoices without goods - Appellant contended that the statements have no evidentiary value since the procedure under Section 9D was not followed - Whether the statements recorded during investigation can be relied upon without following Section 9D - HELD - Following the Hon'ble High Court at Punjab and Haryana, Section 9D(1) is mandatory. Unless the circumstances in clause (a) exist, the maker of the statement must first be examined as a witness before the adjudicating authority, who must then form the opinion that the statement should be admitted in evidence in the interests of justice. If this procedure is not followed, the Revenue is regarded as having given up the witnesses and the statements must be eschewed from consideration as not relevant for proving the truth of their contents - The statements of the truck owners have no evidentiary value and cannot be relied upon, and the penalty founded on them cannot be sustained. [Read less]

2026-VIL-1779-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Eligibility to CENVAT credit of CVD paid at concessional rate on imported coal under Customs Notification No. 12/2012-Cus - Respondent, a manufacturer of Sponge Iron and M.S. Ingot, imported steam coal on payment of CVD at concessional rate and availed CENVAT credit under Rule 3(1)(vii) of CENVAT Credit Rules, 2004 - Appellant-Revenue alleged that the credit was not admissible since CENVAT credit in respect of concessional rate of excise duty on coal under Central Excise Notification No. 12/2012-CE is barred by the proviso to Rule 3(1)(i) - The demands were confirmed with interest and penalty by the adjudi... [Read more]

2026-VIL-219-GSTAT-DEL | Tribunal SGST

GST - Sustainability of demand under Section 73(1) of CGST Act, 2017 for short paid tax already discharged through DRC-03 before the order-in-original - Respondent was issued a demand-cum-SCN under Section 73 on the basis of audit for a financial year and deposited the residual tax along with interest through DRC-03 before the order-in-original was passed and intimated the payment by e-mail - The adjudicating authority confirmed the demand without adverting to the payment and the first appellate authority set aside the tax demand - Appellant-Department contended that the DRC-03 was not placed in time before the adjudicating authority and that the tax was liable to be confirmed with interest and penalty in any case - Whether the order-in-appeal erred in setting aside the tax demand on the ground that the DRC-03 was not considered by the adjudicating authority - HELD - It is not in dispute that the Respondent deposited the tax and a like sum towards interest through DRC-03 before the order-in-original was signed. The order-in-original is silent on this payment and confirms the shortfall as a fresh demand. A demand under Section 73(1) exists to fix what a person owes and to direct that it be paid, and it is not a tool for recovering a second time an amount that has already been received. A person cannot be vexed twice for the same cause of action. Once the short paid tax stood discharged, there was nothing left of that shortfall for Section 73(1) to operate upon - Confirming the demand afresh without application of mind to a payment already on record cannot stand, the issue is answered against the Department - The order-in-appeal setting aside the tax demand is affirmed. The Department's appeal is dismissed - Computation of interest under Section 50(1) of CGST Act, 2017 up to the date of credit to the Government's account or the date of debit from Electronic Cash Ledger on filing of return - Tax was deposited through challans in Form GST PMT-06 and the return was filed later - Appellant-Department contended that interest runs until the date the return is filed since only then is the amount debited from the Electronic Cash Ledger and the liability discharged, while the Respondent contended that interest ceases once the amount is credited to the Government's account - Whether interest under Section 50(1) is to be computed to the date on which the tax stands credited to the Government's account or to the later date of debit from the Electronic Cash Ledger on filing of the return - HELD - A registered person deposits money under Section 49 through a challan in Form GST PMT-06 and on realisation of the challan the amount is credited to the Government's account and treated as credited to the Electronic Cash Ledger from that date - Once cash is credited to the Government's account the liability is discharged from the deposit date, and the debit at the time of filing of the return is a mere accounting entry, so interest cannot be charged for the period between the deposit and the filing of the return - For tax paid by depositing cash through Form GST PMT-06, interest under Section 50(1) runs from the due date up to the date the amount is credited to the Government's account and not up to the later date of debit from the Electronic Cash Ledger, and the issue is answered in favour of the Respondent - Quantum of interest payable under Section 50(1) of CGST Act, 2017 for a financial year and entitlement to further credit of interest paid with the short paid tax - Interest for one month was computed by the adjudicating authority up to the date of filing of GSTR-3B although the entire tax for that month was deposited through six challans before the filing, the return having been rendered ineffective by a technical glitch on the portal - Whether the interest is correctly quantified by the first appellate authority and whether the Respondent is entitled to further credit against the balance - HELD - Since the entire tax for the month was deposited through challans before the return was filed, interest is correctly computed from the due date to each challan's own date and not to the date of return filing. For the remaining months there is no instance of cash being credited to the Government's account materially earlier than the filing of the return, as the delay arose from late filing simpliciter. The month-wise recomputation of the first appellate authority, after correcting the due date for one month in terms of the notification, calls for no interference and the plea of the Department for restoration of the original figure is rejected. The interest paid along with tax on the short payment corresponds to the interest on the tax shortfall itself, which stands discharged by that payment. It is analytically distinct from the interest on delayed monthly payments, and a single sum cannot be credited twice to discharge two distinct liabilities - The interest liability as determined by the first appellate authority is upheld, the balance is payable after crediting the amount already paid, and no further credit is due on account of the payment made along with the tax - Sustainability of penalty under Section 122(2)(a) read with Section 73 of CGST Act, 2017 where tax and interest were not paid within thirty days of the SCN - Respondent paid the short paid tax and interest after the thirty-day window from the SCN had expired and before the order-in-original, and contended that the dispute arose from a bona fide reconciliation issue without mens rea and that Section 122(2)(a) cannot be invoked in a Section 73 proceeding - Whether the penalty under Section 122(2)(a) read with Section 73 is sustainable - HELD - Section 73(8) provides that no penalty is payable where tax along with interest is paid within thirty days of issue of the SCN. Since the payment was not made within thirty days, the Respondent is liable to pay penalty under Section 73(9). Section 73(9) and Section 122(2)(a) prescribe an identical formula for the same category of case, the two provisions are not in competition, and invoking Section 122(2)(a) read with Section 73 is justified. Penalty ought not to follow absent contumacious conduct applies to genuinely discretionary penalties, but Sections 73(8), (9) and (11) read together leave no discretion once the thirty-day window is missed and the demand is confirmed. The penalty is imposed not because of fraud or dishonest intent but because the law has fixed a specific minimum consequence for payment outside the thirty-day period. The bona fide origin of the dispute and the payment of the bulk of the interest before the SCN speak to the character of the default and do not alter the statutory consequence - The penalty is upheld, the order-in-appeal is confirmed. [Read less]

2026-VIL-217-GSTAT-KLK | Tribunal SGST

GST - Liability to interest and penalty under Section 73(9) of CGST Act, 2017 for belated payment of short paid tax - Appellant-taxpayer was issued an SCN under Section 73 for short payment of GST for a financial year and the demand was confirmed by the adjudicating authority and the FAA - Appellant contended that the tax was already paid by filing appropriate return and that penalty is arbitrary since mere failure to pay tax within time does not make the taxpayer liable to penalty unless it acted in conscious disregard of its obligations - Whether interest and penalty are payable where the short paid tax is paid belatedly... [Read more]

2026-VIL-1774-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Re-assessment of Classification and Value under Section 17(5) of Customs Act, 1962 without Speaking Order - Respondent self-assessed imported ice making machinery under CTH 8438 80 90, the proper officer re-assessed it under CTH 8418 69 90 and enhanced the value, and Respondent paid the revised duty under protest to avoid demurrage - No order was passed under Section 17(5) and no opportunity was given to Respondent to submit documentary evidence - Commissioner (Appeals) set aside the revised classification and valuation, and Revenue contended in appeal that payment of duty amounted to acceptance of the re-assessment - Whether the re-classification and enhancement of value are sustainable in the absence of a speaking order under Section 17(5) - HELD - Section 17(5) requires the proper officer to pass a speaking order within fifteen days where re-assessment is contrary to the self-assessment, except where the importer confirms acceptance in writing. Admittedly, no order was passed under Section 17(5). Importers pay the revised duty to cut down demurrage and other charges, and this cannot be taken as confirmation of acceptance. Respondent paid under protest by a letter and filed appeals against the Bills of Entry, so there was never any confirmation of acceptance in writing. The re-assessment is to be set aside where no speaking order is passed - Non-issuance of an order under Section 17(5) proves fatal to the Revenue's case, and the revised classification and enhancement of value are set aside – The appeal is dismissed - Classification of Imported Ice Making Machinery under CTH 8438 80 90 or CTH 8418 69 90 - Respondent classified the imported ice cream making machines under CTH 8438 80 90, Revenue re-classified them under CTH 8418 69 90 relying on the Explanatory Notes to Chapter 84 and an Advance Ruling, and Commissioner (Appeals) upheld the classification under CTH 8438 - Revenue itself had classified such goods under CTH 8438 in a review order of 2008 and in Orders-in-Appeal of 2012 and 2025, which it did not agitate further, and the later clearance of the same goods of the same importer was allowed under CTH 8438 - Whether the re-classification of the goods under CTH 8418 is sustainable - HELD - There is some force in the point made by Revenue on the Explanatory Notes. However, in spite of the Explanatory Notes, Revenue itself was classifying the machines under CTH 8438, and the classification arrived at in the two Orders-in-Appeal stands accepted. The change in classification was not supported by any order under Section 17(5), which would have enabled Respondent to put forth its defence. Revenue cannot pick and choose the course of filing appeals in respect of the same goods by not filing appeals in some cases citing the National Litigation Policy and filing them in others. Total confusion prevails in the classification of the goods, as Revenue classified them under CTH 8438 in 2008, 2012, 2018 and 2025 and under CTH 8418 in the present imports, and the benefit of such confusion goes to Respondent - Re-classification under CTH 8418 is legally not sustainable, the correct classification is CTH 8438, and the classification arrived at by Revenue is set aside - Enhancement of Declared Value of Imported Goods without Evidence or Following Customs Valuation Rules, 2007 - Value of the imported goods was enhanced by the assessing officer consequent to the change in classification, Respondent paid duty on the enhanced value under protest, and Commissioner (Appeals) set aside the enhancement as made without evidence - No order under Section 17(5) stated the method adopted for arriving at the revised value - Whether the enhancement of the declared value can be sustained - HELD - Where no order under Section 17(5) is passed stating the method or procedure adopted for arriving at the revised value, the enhanced value gets set aside on that ground itself. No reasons were given for rejection of the transaction value, no corroborative evidence such as comparable goods or NIDB data was brought forth, and no opportunity was given to justify the declared value. The invoice raised by the manufacturer should not be doubted unless found to be fake or not genuine, and the transaction value cannot be rejected without clear and cogent evidence. Mere acceptance of the enhanced value by the importer does not preclude it from appealing against an arbitrary enhancement. Revenue has not brought in any evidence as to the basis of the enhanced value, and the case laws cited by it are a toothless defence to cover up its shortcomings at the initial stage - The findings of the Commissioner (Appeals) on valuation are concurred with, the enhancement of value is rightly set aside, and the appeals filed by Revenue are dismissed. [Read less]

2026-VIL-1772-CESTAT-MUM-CU | CESTAT CUSTOMS

Customs - Computation of IGST on Imported Goods under Section 3(7) and 3(8) of Customs Tariff Act, 1975 where Basic Customs Duty is Exempted under Notification No. 19/2015-Customs for Imports against DFIA - Appellant imported polyester viscose fabrics against a valid DFIA claiming exemption from basic customs duty, and the customs system captured basic customs duty at the tariff rate for computing IGST although the duty claimed was zero - Appellant paid the IGST as computed since the system did not permit amendment and appealed against the assessed Bills of Entry, and Commissioner (Appeals) rejected the appeals holding tha... [Read more]

2026-VIL-1773-CESTAT-KOL-CU | CESTAT CUSTOMS

Customs - Penalty on Chartered Engineers for Valuation of Second Hand Machinery Where the Demand Against the Importers is Set Aside - Appellants, Chartered Engineers, were engaged by the importers under the Board's Circular dated 19.11.1987 to examine and value imported old and used offset printing machinery, and the goods were released on payment of duty on that valuation - Investigation alleged undervaluation by the importers, and penalty was imposed on each Appellant on the allegation that they omitted to ascertain the correct present value independently, rendering the machines liable to confiscation - Appellants contended that they applied reverse indexation on the wholesale price index and depreciation as per the Board's circular, and that their valuation was only a proposal which the proper officer was not bound to accept - Revenue contended that the certificates were issued without proper verification and inspection - Whether penalty on the Chartered Engineers is sustainable when the demand, penalty and confiscation against the importers are set aside - HELD - In the appeals of the main importers decided earlier by the same Bench, the allegation of undervaluation was not corroborated by documentary evidence, and the opinion of the experts of the printing institute was full of discrepancies and could not be used as evidence to enhance the value. The method adopted by the Chartered Engineer was the logical and scientific method, which the Revenue discarded while implicating the Chartered Engineers to prove its case. The entire demand was also held time barred, and the demand, penalty and confiscation against the importers and the penalties on their directors were set aside. Since the confirmed demand, interest and penalties against the main appellants are legally not sustainable, the penalties on the present Appellants also do not survive - The penalties imposed on the Appellants are set aside, and the appeals are allowed with consequential relief, if any, as per law. [Read less]

2026-VIL-1770-CESTAT-KOL-CE | CESTAT CENTRAL EXCISE

Central Excise - Includibility of 99% VAT Retained under State Industrial Incentive Scheme in Transaction Value under Section 4(3)(d) of Central Excise Act, 1944 - Appellant, a manufacturer of water storage tanks and MS pipes, was granted benefit under the Industrial and Investment Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009, under which 99% of the tax payable for each return period was allowed as partial exemption or remission and 1% was deposited - Revenue held the VAT retained to be includable in the assessable value relying on Super Synotex Ltd., and confirmed the duty demand with interest and equal penalty under Section 11AC - Whether the 99% VAT retained under the incentive scheme forms part of the price or consideration received from the buyer and is includable in the transaction value - HELD - Eligibility under the scheme depended upon investment and commencement of commercial production, and the benefit was limited by the fixed capital investment and the entitlement period. The assessment mechanism first quantified the tax payable and thereafter allowed the statutory benefit. The retained amount was not an additional amount paid by the buyer by reason of or in connection with the sale and is therefore not includible in the transaction value under Section 4(3)(d). Super Synotex Ltd. case is distinguishable, since the amount retained was not the Appellant's income but a subsidy given by the State Government under its industrial policy. A time bound and investment linked 99% VAT retention granted to an eligible industrial unit is a State incentive and not sale consideration, though those matters arose under the earlier 2003 policy and 2005 scheme - The remission of 99% VAT is a subsidy given by the State Government and is not includable in the assessable value - The demand of duty with interest and penalty is not sustainable - Extended Period of Limitation and Penalty under Section 11AC of Central Excise Act, 1944 on Valuation Dispute Arising from Audit - Demand was raised on the basis of an audit of the Appellant's unit, the audit had already noticed the retention of the 99% VAT benefit, and the Department sought particulars by letters to which the Appellant replied before the show cause notice was issued - Whether the extended period was validly invoked and the equal penalty under Section 11AC is sustainable - HELD - The retention of the 99% VAT benefit was known to the Department, and the Appellant furnished the particulars sought before the issuance of the show cause notice. The Appellant has not suppressed any information, and the extended period cannot be invoked. The CBEC Circular No. 1063/2/2018-CX has also recognised that the extended period is unavailable on this valuation controversy. Suppression of facts with intention to evade duty is not established, and the equal penalty under Section 11AC is therefore not sustainable - The demand cannot be confirmed by invoking the extended period, the penalty is set aside, and the appeal is allowed [Read less]

2026-VIL-1769-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise - Scope of Exclusion in Clause (A) of Rule 2(l) of CENVAT Credit Rules, 2004 for Contractor Services - Appellant, a cement manufacturer, took credit of service tax on services of contractors engaged for setting up a captive thermal power plant and for expansion, upgradation, repair and maintenance work in the cement plant - Audit alleged that the services involved construction of a civil structure or building and laying of foundation or structures for support of capital goods and were excluded from the definition of input service with effect from 01.04.2011 - Adjudicating Authority confirmed the entire demand, though it had itself found part of the credit to be in order, and the Commissioner (Appeals) upheld the denial for six contractors on the basis of a few sample bills - Whether the services of the contractors fall within clause (A) of the exclusion in Rule 2(l) and what test governs that inquiry - HELD - The main limb of the definition is wide and the inclusive limb expressly covers services used in relation to modernisation, renovation or repairs of a factory. Once a service is caught by the exclusion, its nexus with manufacture cannot rescue it. The exclusion is not engaged merely because a service is rendered in the course of a project, or because it involves steel, fabrication or a works contract. The service must be one of the specified services, and it must be used for construction of a building or a civil structure or a part thereof, or for laying of foundation or making of structures for support of capital goods. Erection, installation and commissioning of machinery, its repair and maintenance, and the hire of equipment such as a crane are not by themselves any of these purposes. This is a question of fact to be answered from the work order and the invoice, transaction by transaction - Rule 9(6) places the burden of proving admissibility on the manufacturer, which is discharged in the first instance by producing the invoices and work orders and explaining how the service was used. Rule 9(6) neither permits a blanket assumption that everything done by a contractor on a project site is construction nor allows an authority to call upon the assessee to prove a negative. The order in original disposed of five contractors in a single sentence without reference to any work order or invoice. The order in appeal rested on sample bills and bare conclusions. For the next period the Department itself found the work of the largest contractor to be repair and maintenance of factory machinery, and that finding must be taken into account - The denial of credit on merits cannot be sustained, and eligibility is to be examined afresh only for the credit that is not time barred - The appeal is partly allowed on limitation - Extended Period of Limitation under Section 11A(4) of Central Excise Act, 1944 for Recovery of CENVAT Credit - Show cause notice invoked the extended period on the allegations that details of the credit were not shown in the ER-1 returns, that invoices and work orders were not furnished before the audit, and that the matter would not have come to light but for the audit, while acknowledging that all the transactions were available in the records of the Appellant - Audit had examined the invoices and issued its report long before the notice, and the Appellant had described the scope of work of each contractor to the Range officer, yet the notice was issued after a considerable delay without explanation - Whether the extended period under Section 11A(4) was validly invoked - HELD - When the notice was issued, the normal period was one year, and the later enlargement to two years cannot revive a demand already barred. Section 11A(4) extends the period to five years only where duty has escaped by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade payment of duty - Where the facts are known to both parties, omission by one to do what he might have done is not suppression. The burden of proving suppression lies on the Revenue - The extended period was not available, the demand for credit beyond one year before the date of the notice is barred by limitation and set aside together with interest, and the credit within the normal period is remitted to the Adjudicating Authority to quantify and decide its eligibility afresh - Interest under Section 11AA and Penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 on Credit Denied to Contractor Services - Penalty equal to the credit was imposed on the finding of wilful intention, and the notice proposed penalty only under Rule 15(2) on the footing of suppression - Extended period had been held not invocable and part of the demand was remitted for fresh decision - Whether interest and the penalty under Rule 15(2) read with Section 11AC can be sustained - HELD - The penalty rests on the very allegation of suppression with intent to evade, which stands unproved, and it cannot stand for any part of the period. The Adjudicating Authority cannot on remand impose a penalty on a footing not proposed in the notice, since adjudication cannot travel beyond the show cause notice. The dispute is in any event one of interpretation, and no penalty is therefore imposable. Interest under Rule 14 read with Section 11AA follows only on such credit within the normal period as is found on remand to be ineligible and to have been utilised - The penalty is set aside in its entirety, interest on the time barred demand is set aside, and the appeal is partly allowed on limitation. [Read less]

2026-VIL-1771-CESTAT-DEL-CE | CESTAT CENTRAL EXCISE

Central Excise - Claim of Interest at 12% per annum on Refund of Amount Deposited during Investigation as Compensation - Appellant deposited amounts during investigation and before the first show cause notice, the demand was confirmed and the deposits appropriated, and the Tribunal later set aside the order of the Commissioner - Refund was sanctioned without interest, and Appellant claimed interest at 12% from the date of payment, relying on decisions following Sandvik Asia Ltd. v. Commissioner of Income Tax - Whether interest can be granted at 12% per annum as compensation on the amount wrongly withheld - HELD - The decisions relied upon by the Appellant followed Sandvik Asia, which was referred to a larger bench in Commissioner of Income Tax, Gujarat v. Gujarat Fluoro Chemicals. The larger bench clarified that Sandvik Asia was passed on the peculiar facts of that case and that an assessee can claim only the interest provided under the statute. Those decisions did not have the benefit of Gujarat Fluoro Chemicals. The Act prescribes the rate and period of interest in sections 11AA, 11BB and 35FF, and the rate is notified by the Central Government within the range by delegated legislation. Courts and Tribunals cannot fix the rate, and interest can be paid only at the rate and from the date as per the law and not on a view of fairness or equity - The claim of interest at 12% is rejected, and interest can be granted only under the statutory provision applicable - Nature of Amount Deposited during Investigation and Interest under Section 11BB or Section 35FF of Central Excise Act, 1944 on its Refund - Appellant deposited amounts through cheques and a debit entry in the CENVAT account at the behest of investigating officers before any assessment, the amounts were credited to the excise duty head of account, and they were appropriated in the adjudication order which was set aside by the Tribunal - Revenue contended that the refund was one of duty under Section 11B, accepted by the Appellant, so that interest under Section 11BB was not payable since the refund was sanctioned within three months of the application - Whether the amount deposited during investigation is duty, and whether interest is payable under Section 11BB or Section 35FF - HELD - For an amount to be tax or duty, it must be deposited under that head, paid against an assessment or modification of an assessment, and be due at that time. At the time of deposit there was neither assessed duty nor a confirmed demand, so the amount was only a deposit akin to the balance in the erstwhile Personal Ledger Account or the electronic cash ledger under GST. The Act empowers no officer to compel an assessee to pay any amount in anticipation of liability that may arise after investigation, and the assessee can seek refund immediately without proving duress. The amount was not due even after the adjudication order since the Appellant had filed an appeal, and the Commissioner should not have appropriated it. The Appellant did not apply under Section 11B, and even if it had, the nature of the amount would not change. Where the amount deposited during investigation exceeds the mandatory pre-deposit and has not been refunded, the entire amount is to be treated as pre-deposit. The Tribunal admitted the appeal treating the entire amount as pre-deposit, so Section 35FF applies - The amount deposited during investigation is treated as deposit under Section 35F, interest is payable under Section 35FF at the applicable rate from the date of deposit till the date of refund, and the appeal is partly allowed [Read less]

2026-VIL-1768-CESTAT-CHE-CE | CESTAT CENTRAL EXCISE

Central Excise – CENVAT Credit – Refund under Rule 5 of CENVAT Credit Rules, 2004 of Unutilised Credit on Clearances to 100% Export Oriented Unit as Deemed Export – Appellant, a manufacturer of hydraulic motor parts, cleared the final products to a 100% Export Oriented Unit without payment of duty under the notification, and also cleared them to customers in the Domestic Tariff Area – Refund of CENVAT credit on inputs used in the manufacture was sanctioned by the original authority, but the Commissioner (Appeals) allowed the Revenue's appeals, and the recovery of the refunds sanctioned was confirmed in the protective show cause notices – Appellant contended that clearances to a 100% EOU are deemed export and that Explanation (1A) to Rule 5 was inserted only with effect from 01.03.2015, after the period in dispute – Revenue contended that clearance to an EOU is only a legal fiction and not export for Rule 5, and relied on the decision of the jurisdictional High Court in BAPL Industries Ltd. v. Union of India – Whether the authorities below were justified in rejecting the refund claims under Rule 5 of CENVAT Credit Rules, 2004 – HELD – The issue is no more res integra. In JBM Auto Limited v. CCE Noida, the coordinate Bench followed the decision of the Allahabad High Court in the assessee's own case and the decision of the Gujarat High Court in Commissioner of Central Excise and Customs v. NBM Industries, and held that clearance to a 100% EOU is deemed export entitling the assessee to refund of unutilised CENVAT credit under Rule 5. The Gujarat High Court decision, followed in E.I. Dupont India Pvt. Ltd. v. Union of India, had not been challenged further and is conclusive and final. A sale to a 100% EOU is virtually in the nature of export, since such a unit cannot sell its products in the local market and is obliged to export its entire production. Export takes into its fold deemed export as well, and no distinction can be drawn between export and deemed export. BAPL Industries Ltd. examined the vires of the CBEC Circular vis-a-vis export and deemed export in the context of the EXIM Policy. That is an altogether different dispute from the present one, and the decision was distinguished by both the Allahabad and Gujarat High Courts – Denial of refund as upheld in the impugned common order cannot be sustained, the same is set aside, and the appeals are allowed with consequential benefits, if any, as per law [Read less]

2026-VIL-1775-CESTAT-CHE-ST | CESTAT SERVICE TAX

Service Tax - Extended Period of Limitation under Section 73 of Finance Act, 1994 for Non-Deposit of Service Tax Collected from Flat Buyers - Appellant, a builder of residential complexes, obtained registration late and filed no returns until investigation began, collected service tax from flat buyers without depositing it, and made a declaration under VCES which excluded the landowners' share and was not accepted - First show cause notice invoked the extended period on the grounds of non-payment, belated registration and suppression, while Appellant contended that the particulars were in its books and the VCES declaration showed bona fides - Whether the extended period was validly invoked and the entire demand is time barred - HELD - Suppression contemplates deliberate withholding of material facts, ordinarily with intent to evade tax, and mere inadvertence or bona fide interpretation is not suppression. Having collected service tax from buyers, the Appellant was bound by Section 73A to deposit it forthwith and to disclose the transactions and tax collected in its returns. Failure to do so is not a neutral omission but concealment of material particulars. Maintenance of books does not discharge the separate obligation to disclose in returns, and subsequent access to records during investigation does not cure the earlier non-disclosure. Nizam Sugar Factory does not apply to a first show cause notice. VCES is a voluntary disclosure scheme and not a certificate of compliance. Financial hardship is untenable since the Appellant was only required to remit tax already collected, and under Section 80 a bald plea cannot discharge the burden of proving reasonable cause. A contention that tax was not leviable before 01.07.2010 is a mixed question of fact and law not raised before the original authority - The plea that the first show cause notice is wholly time barred is prima facie not sustained, and the matter is remanded for fresh determination of taxability, valuation and limitation on evidence, with verification of challan payments - Taxability and Valuation of Landowners' Share under Joint Development Agreements - Appellant constructed residential complexes under agreements with landowners, under which the constructed area was shared between the developer and the landowners - Appellant contended that no monetary consideration was paid, that the parties were co-developers, and that tax on the landowners' share would amount to double taxation - Respondent contended that land or development rights were transferred against constructed flats as non-monetary consideration, to be valued with reference to the price of similar flats - Whether the landowners' share is liable to service tax and how it is to be valued - HELD - The agreements were not produced, and the nature of the transaction is to be determined from the contractual terms, the rights and obligations of the parties and the consideration flowing between them, and not from nomenclature - A genuine joint venture is distinct from a collaboration agreement under which a builder constructs in return for land or development rights. Absence of monetary consideration does not exclude a transaction from Section 67. Where the arrangement is a taxable construction service, the value is determined under Section 67 and Rule 3 of the Service Tax (Determination of Value) Rules, 2006. Valuation arises only after taxability is established and cannot override an applicable exclusion - The landowners' share cannot be excluded merely because the consideration is non-monetary, but its taxability and value are to be determined by the adjudicating authority from the agreements, the applicable period and the comparable flats, after verifying duplication of taxable value - Construction of Residential Complex Service or Works Contract Service in Developer's Share and Taxability of Builder Services before 01.07.2010 - Appellant contended that its construction activity was a composite works contract, that builder services before 01.07.2010 were not taxable under the Board's circulars, and that the show cause notice cited Section 66E(b) instead of Section 66E(h) - Respondent contended that the Appellant was registered under construction of complex service, produced no contracts, and that classification is immaterial in the negative-list regime - Whether the activity is taxable as construction of residential complex service or is a works contract, and whether the notice is defective - HELD - The law on construction services by a builder or developer before 01.07.2010 has been settled in favour of builders by Circular No. 108/2/2009-ST, Circular No. 151/1/2012-ST and various Tribunal decisions. Jain Housing does not establish a blanket exemption for every joint development agreement, and the provisions applicable from 01.07.2010 are to be examined separately. Larsen & Toubro Ltd. distinguishes a composite works contract involving transfer of property in goods from a contract for service simpliciter, and registration under a particular category does not establish the correct classification. Following Real Value Promoters Pvt. Ltd., an indivisible composite contract cannot be taxed as construction of complex service. Classification does not cease to be material from 01.07.2012, since the declared service of works contract in Section 66E(h) remains relevant. The abatement granted towards material costs does not establish a works contract, and the Appellant must show from the contracts that property in goods is transferred. Mere citation of an incorrect statutory provision does not invalidate the notice where the authority was competent and the demand is otherwise sustainable, as held in J.K. Steel Ltd. v. Union of India. The admission of the Managing Director establishes collection and non-payment of tax but cannot determine classification - The developer's share is to be examined from the agreements to determine whether it is service simpliciter or a composite works contract, and the liability is to be quantified under the provision applicable to the relevant period - Reverse Charge Liability on Goods Transport Agency Service - Demand was based on ledger entries of transport payments and the statement of the Managing Director, while Appellant contended that no consignment notes were produced and the transporter was not identified as a goods transport agency - Respondent relied on M.L. Agro Products Ltd. and Bharathi Soap Works for the proposition that a document accompanying the goods can be a consignment note - Whether the Appellant is liable to pay service tax under reverse charge on goods transport agency service - HELD - The statutory definition of goods transport agency during the relevant period required a person providing service in relation to transport of goods by road and issuing a consignment note, by whatever name called. The existence of a consignment note or a document satisfying the statutory requirement is a relevant jurisdictional fact. The Revenue cannot substitute the statutory requirement by observing that freight must necessarily have been paid against some document - The demand is set aside and remanded for re-examination of whether the transporter was a goods transport agency and whether the service fell within the reverse-charge notification - Reverse Charge Liability on Security, Manpower Supply and Legal Services - Appellant contended that security services were received from agencies which had been paid including service tax, that workers were directly employed and paid wages under its supervision, and that the recipient of legal service was not shown to be a legal professional - Respondent relied on ledger entries and the statement of the Managing Director - Whether the Appellant is liable under reverse charge on security, manpower supply and legal services - HELD - On security service, the adjudicating authority must determine whether the providers fell within the class specified in Notificatio [Read less]

2026-VIL-106-SC | Supreme Court VAT

Limitation Act, 1963 - Insolvency and Bankruptcy Code, 2016 - Limitation for appeal to the Supreme Court under Section 62 of IBC, 2016 - Commencement of limitation from pronouncement or from receipt of certified copy - Appellant filed the appeal under Section 62 of the IBC against the judgment of the NCLAT, which confirmed the Resolution Plan approved by the NCLT, and the Appeal was filed on the 111th day from the date of pronouncement - Respondent raised a preliminary objection on limitation - Whether the Appeal is within the period of limitation under Section 62 of the IBC - HELD - The IBC is an exhaustive, self-contained code, and Section 238-A applies the Limitation Act, 1963 only as far as may be. The Section 62 provides a limitation period of 45 days extendable by a discretionary condonable period of up to 15 days, which creates an absolute outer ceiling of 60 days. The expression from the date of receipt of the order in Section 62(1) cannot be read as the date on which a party chooses to apply for and collect a certified copy. Such a reading would make the limitation period fluctuating and indefinite and would render Section 12(2) of the Limitation Act redundant - For an appeal under Section 62 of the IBC, the Supreme Court Rules, 2013 impose an affirmative obligation on the Appellant to apply for and produce a certified copy. Under Rule 91 of the NCLAT Rules, 2016, limitation commences on the date of pronouncement. Under Section 12(2) only the time requisite for obtaining the certified copy is excluded, and under the Explanation to Section 12 the period of inaction before applying for the copy cannot be excluded. The Appellant applied for the certified copy on the 35th day, and the time requisite for obtaining it stands excluded. After receipt of the copy, the Appellant took a further 41 days to file, so the actionable period totalled 76 days against the absolute ceiling of 60 days. The Appeal was thus filed 16 days beyond the outer limit within which delay can be condoned - The preliminary objection is sustained. The appeal is dismissed as barred by limitation [Read less]

2026-VIL-1193-CAL | High Court SGST

GST - Denial of Input Tax Credit for belated filing of returns - Eligibility to Input Tax Credit under Section 16(5) of the CGST Act, 2017 for Financial Year 2019-20 where returns are filed up to 30.11.2021 - During the pendency of the writ petition, the Electronic Credit Ledger of the Petitioner was blocked, and an amount was debited towards recovery of the disputed demand without prior intimation or an opportunity of being heard - Whether the Petitioner can be denied the benefit of sub-section (5) of Section 16 inserted retrospectively from 1st July, 2017 and is eligible to input tax credit where the returns were filed u... [Read more]

2026-VIL-1191-CAL | High Court SGST

GST - Validity of ex parte adjudication order confirming demand despite reply filed to show cause notice - Petitioner challenged the show cause notice and the consequential order confirming the demand of tax and penalty, contending that despite filing a reply uploaded on the common portal, the Adjudicating Authority observed that no reply was filed and found that ample opportunities of personal hearing were given - Whether the order confirming the demand, passed ex parte on the finding that no reply was filed, can be sustained - HELD - The reply to the notice was filed and uploaded on the common portal, as evident from the record. The Adjudicating Authority arrived at an erroneous finding that no reply was filed and passed an ex parte order confirming the demand without considering the reply - The impugned order is quashed and set aside, the Respondent is directed to revisit the issue by considering the reply and to pass a reasoned and speaking order after affording personal hearing - The writ petition is disposed of - Negative blocking of Electronic Credit Ledger and cancellation of registration for non-filing of returns - Registration of the Petitioner was cancelled for non-filing of returns for six months, and the Electronic Credit Ledger was made inoperative on the basis of an investigation for availment of inadmissible ITC, though no order for negative blocking was passed - Whether the blocking of the Electronic Credit Ledger and the cancellation of registration can be sustained - HELD - The decision of the authority, including blocking the Electronic Credit Ledger negatively, is dehors the mandate of the settled principles of law. The Supreme Court in Deputy Director, Directorate General of GST Intelligence v. Kings Security Guard Services Pvt. Ltd. observed that the Electronic Credit Ledger cannot be negatively blocked for wrongful availment of ITC – The Rule 86A(1) of the CGST Rules does not contemplate an order requiring a taxpayer to replenish the Electronic Credit Ledger to the extent of ITC used in the past, as it would amount to an order for recovery of tax - The Adjudicating Authority is directed to consider the non-filing of returns and the negative blocking in the light of these judgments, and upon being satisfied to revoke the cancellation and unlock the Electronic Credit Ledger, without debarring action in accordance with law if the Petitioner is found to have committed the offence - The writ petition is disposed of. [Read less]

2026-VIL-1783-CESTAT-ALH-ST | CESTAT SERVICE TAX

Service Tax - Exemption under Entry 13 of Notification No. 25/2012-ST dated 20.06.2012 to works contract service of repair and renewal of public road provided to PWD - Appellant, registered for providing Works Contract Services, received amounts in the Financial Year 2014-15 from the PWD against two work orders for repair and renewal of road - SCN was issued on the basis of third party information received from the Income Tax Department - The FAA upheld the order on the ground that the work order produced related to the Financial Year 2015-16 whereas the receipt pertained to 2014-15, so the nature of the service could not ... [Read more]

2026-VIL-212-GSTAT-PYG | Tribunal SGST

GST - Demand on Mismatch between GSTR-2A and GSTR-3B - Availment in Subsequent Year of Input Tax Credit Omitted in Previous Financial Year under Section 16(4) read with Section 39(9) of CGST Act, 2017 - Appellant claimed input tax credit in GSTR-3B for April 2019 that exceeded the credit auto-populated in GSTR-2A for that month, and the proper officer raised a demand with interest and penalty under Section 73 - Whether the credit pertaining to inward supplies of the previous financial year was available and could be availed in GSTR-3B for April 2019 - HELD - The Appellant furnished the details of each supply along with tax invoices, e-way bills, bilty and GSTR-2A extracts, the inward supplies were genuine, were received in the previous financial year and that the total credit was correct. A minor error in describing the month of one supply could be reconciled from the documents and does not justify denial of credit. The Appellant held excess unutilised credit in the previous year, which corroborates the claim - Section 39(9) permits rectification of omissions before the due date of the September return of the following financial year, provided the omission was not discovered through scrutiny, audit, inspection or enforcement, and the claim was made before any such activity. Under Section 16(4) the credit was claimed before the due date for the September return. GSTR-2A is a facilitation document that does not impact the ability to avail credit on self-assessment under Section 16, and the condition in Section 16(2)(aa) was inserted with effect from 01.01.2022 and does not apply to the disputed period. A mismatch between GSTR-3B and GSTR-2A cannot by itself be a ground for reversal of credit when the claim is fully verified. A later notice under Section 61 on the same mismatch was also dropped as the reply was found satisfactory - The Appellant was legally entitled to avail and utilise the credit in GSTR-3B for April 2019, and the demand is struck off – The appeal is allowed - Violation of Principles of Natural Justice in Adjudication and Appeal - Notices Uploaded in Additional Notices and Orders Tab, No Date of Hearing under Section 75(4), Order Passed on Undisclosed Date and Non-Speaking Order under Section 107(12) of CGST Act, 2017 - Notice under Section 73 and its reminder were uploaded in the Additional Notices and Orders tab of the portal, with the columns for date, time and venue of hearing marked NA - Appellant did not reply or appear, and the proper officer passed the order on the date fixed for reply - First Appellate Authority dismissed the appeal on a later date, observing that the Appellant was absent and the order had no infirmity - Whether the Order-in-Original and the Order-in-Appeal are vitiated by violation of principles of natural justice - HELD - The Revenue did not dispute that a primary tab for Notices and Orders existed, and no material supported the contention that taxpayers were aware of the practice of uploading notices in the secondary tab – The service of notices at both stages was not proper, and this amounted to denial of opportunity of hearing. Section 75(4) requires a hearing where any adverse decision is contemplated, and it prescribes two independent requirements, one of a written reply and the other of an oral hearing. Failure to avail one does not lead to denial of the other. The proper officer was therefore obliged to fix a date of hearing, which was not done. Both authorities proceeded ex parte and passed orders on later dates that were neither fixed nor communicated - The authority must either pass the order on the date fixed or fix and communicate another date, failing which the ex parte nature is forced on the taxpayer and natural justice is breached - Both the Order-in-Original and the Order-in-Appeal are set aside, the demand with interest and penalty is struck off. [Read less]

2026-VIL-210-GSTAT-VSK | Tribunal SGST

GST - Refund of unutilised ITC distributed through Input Service Distributor to SEZ unit making zero-rated exports – Appellant-SEZ unit exporting goods without payment of integrated tax, received ITC distributed through an Input Service Distributor which remained unutilised - Refund claims were rejected on the ground that, being the recipient of supplies to an SEZ unit, only the supplier could claim refund under Rule 89 of the CGST Rules - Whether an SEZ unit making zero-rated exports is entitled to refund of unutilised ITC distributed through an Input Service Distributor - HELD - The claim of the Appellant is not founded merely on its status as recipient of supplies to an SEZ unit but arises from unutilised ITC validly distributed through the Input Service Distributor and attributable to its own zero-rated exports. Section 16(1) of the IGST Act treats exports and supplies to an SEZ unit as distinct categories of zero-rated supply, and Section 54(3) of the CGST Act read with Rule 89(4) provides the framework for refund of unutilised ITC on zero-rated supplies made without payment of tax. The second proviso to Rule 89(1) addresses direct supplies to an SEZ unit or developer and cannot be extended to every claim of an SEZ unit, as a procedural rule cannot be applied mechanically to defeat substantive entitlement - The Revenue failed to show any provision extinguishing the entitlement or that the suppliers could claim refund of credit already distributed through the Input Service Distributor. The principle in Britannia Industries Ltd. v. Union of India, SE Forge Ltd. v. Union of India and Wipro Ltd. v. Assistant Commissioner applies squarely. The refund remains subject to verification of eligible ITC and statutory conditions - The impugned orders are set aside, the matters are remitted to the proper officer for quantifying and sanctioning the admissible refund - The appeals are allowed - GST - Rejection of refund on unsubstantiated allegation of prior refund to suppliers and violation of natural justice - First Appellate Authority observed, on the basis of departmental back-office records, that the suppliers had already received refund, though the allegation was not put to the Appellant and the Revenue admitted before the Tribunal that no evidence was available on record - Whether the finding can be sustained as a ground for rejecting the refund claims - HELD - A finding adverse to the entitlement of a taxpayer to refund must be founded on relevant material and reached after a reasonable opportunity to rebut. A reference to back-office records, without disclosure of the underlying material, cannot establish that a corresponding refund was sanctioned. The mere filing of a refund application by a supplier does not prove that the refund was sanctioned or related to the very credit in dispute. The possibility of double refund and proof of double refund are different matters, as the former may justify verification while the latter requires evidence - The doctrine of audi alteram partem requires notice with an opportunity of hearing and a reasoned order - The finding is unsustainable and cannot be a ground for rejection, though double refund is not permitted, and any proposed exclusion must be supported by cogent documentary evidence after giving the Appellant a reasonable opportunity to respond - The appeals are allowed. [Read less]

2026-VIL-211-GSTAT-VSK | Tribunal SGST

GST - Refund of interest paid on tax discharged through electronic credit ledger in view of retrospective amendment to Section 50(1) of the CGST Act - Appellant filed returns belatedly, discharged tax partly through the electronic credit ledger and partly through the electronic cash ledger, and paid interest on the entire tax liability – The refund claim of excess interest was rejected as premature since no notification bringing the amendment into force was available - Whether the Appellant is entitled to refund of interest paid on the portion of tax discharged through the electronic credit ledger after the substituted proviso to Section 50(1) - HELD - Section 112 of the Finance Act, 2021 substituted the proviso to Section 50(1) and expressly declared that it shall be deemed to have been substituted with effect from 1st July, 2017. The amendment operates retrospectively and not merely from the date of its notification, and interest is leviable only on that portion of tax which is paid by debiting the electronic cash ledger, subject to the conditions in the proviso. The Notification merely appointed the date of commencement and did not alter the retrospective declaration by Parliament. The earlier voluntary payment of interest cannot validate an amount not legally payable, and the reasoning that the claim could not be considered for want of a notification is unsustainable, particularly in view of the administrative instructions of the Board to recover interest only on the net cash tax liability - The Appellant is entitled to have its claim considered in accordance with the retrospective amendment, the competent authority shall verify the interest paid and the portion attributable to tax discharged through the electronic credit ledger - The appeal is allowed - Rejection of refund claim on a fresh ground of limitation under Section 54 without notice and without considering exclusion of period under Notification No. 13/2022-Central Tax - First Appellate Authority dismissed the appeals on the ground of limitation, though this was not the ground of rejection by the original authority, and the Appellant was neither put to notice nor given an opportunity to make submissions - Whether the finding on limitation can be sustained, and whether the matter should be remanded - HELD - When an appellate authority proposes to decide a matter on a ground not put to the affected party, reasonable notice and an effective opportunity to meet that ground must be afforded - The doctrine of audi alteram partem requires notice with an opportunity of hearing and a reasoned order - The Authorised Representative of the Respondent admitted that no notice on limitation was issued. Notification No. 13/2022-Central Tax issued under Section 168A excludes the period from 1st March, 2020 to 28th February, 2022 for computing limitation for refund applications under Section 54 or 55, and limitation must be freshly worked out after this exclusion - The notification does not dispense with the requirement of satisfying limitation, and an open-ended remand is not warranted as the controversy can be determined on the statutory provisions and the record - The finding on limitation is unsustainable and the impugned order is set aside, the competent authority shall recompute limitation after giving effect to the exclusion and quantify the eligible refund after affording the Appellant a reasonable opportunity of being heard - The appeal is allowed. [Read less]

2026-VIL-213-GSTAT-KLK | Tribunal SGST

GST - Refund of Accumulated Input Tax Credit on Export of Goods without Payment of Tax under Section 54(3)(i) of the CGST Act, 2017 - Treatment of Credit Notes Issued under Section 34 in Adjusted Total Turnover under Rule 89(4) of CGST Rules, 2017 - Respondent exporting tea without payment of tax claimed refund of accumulated input tax credit for six months - The original authority sanctioned a part of the claim and rejected the rest - The First Appellate Authority allowed the Respondent's appeal after excluding credit notes issued during the period from the turnover for refund calculation - Whether credit notes issued und... [Read more]

2026-VIL-209-GSTAT-DEL-PB | Tribunal SGST

GST - Refund of Unutilised Input Tax Credit on Export of Services - Services Rendered to Foreign Group Entity as Sub-Contractor not Intermediary Services under Section 2(13) of IGST Act, 2017 - Appellant, an Indian subsidiary, provided marketing support services and IT enabled services to its Australian parent under a Master Services Agreement on a cost-plus basis, receiving consideration in convertible foreign exchange - Refund claims for several periods under Section 54 of the CGST Act read with Section 16 of the IGST Act were rejected on the ground that the services were intermediary services - Whether the services rendered by the Appellant qualify as export of services under Section 2(6) of the IGST Act or fall within intermediary services under Section 2(13) - HELD - An intermediary requires a minimum of three parties and two distinct supplies, namely the main supply and an ancillary supply of arranging or facilitating it. The Appellant is not a broker or agent, has no authority to bind the principal, and the expression any other person by whatever name called must be read on the principle of ejusdem generis - The agreements expressly provide that the Appellant is an independent contractor and not an agent, and it has no contract with the partner universities or the advisors. A person who supplies services on his own account is excluded from the definition, and as per Circular No. 159/15/2021-GST sub-contracting for a service is not an intermediary service - The Appellant supplies the main service to its principal on a principal-to-principal basis. This view is consistent with the various High Court judgments. The rulings of Advance Ruling Authorities relied on by the Revenue are not binding as they are not courts of record, and the High Court judgments are followed - The services therefore qualify as export of services under Section 2(6) of the IGST Act - The orders of the First Appellate Authority are set aside, and the Respondent is directed to refund the unutilised input tax credit along with interest – Ordered accordingly - Power of First Appellate Authority to annul order and direct reconsideration - Bar on Remand under Section 107(11) of CGST Act, 2017 - The Revenue appealed against an order of the FAA which held the refund order incorrect but, instead of allowing the appeal, annulled the order of the proper officer and directed him to reconsider the matter in light of High Court orders - Revenue contended that this was a remand in violation of Section 107(11) of the CGST Act - Whether the order annulling the Order-in-Original and asking the officer to reconsider is in fact a remand order prohibited by law - HELD - Section 107(11) empowers the Appellate Authority to pass such order as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against, but expressly provides that it shall not refer the case back to the adjudicating authority that passed the order. A plain reading shows that the Appellate Authority has jurisdiction to annul an order but cannot direct reconsideration by the authorised officer. Where a specific type of order is expressly prohibited by statute, the Appellate Authority cannot circumvent the bar by a choice of words and pass an order which in substance is a remand order - The Revenue appeal is allowed to that extent, and the matter is remanded to the FAA to decide it on merits in accordance with the principles laid down by the Tribunal. [Read less]

2026-VIL-227-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-Profiteering - Validity of investigation where the notice alleged non-reduction of MRP but profiteering was computed on the base price and the methodology was not communicated to the Respondent - Application alleged that the Respondent, a public sector enterprise, did not pass on the benefit of reduction in rate of tax from pre-GST to post-GST in respect of packaged drinking water, as the MRP fixed by the Railway Board was not reduced - Respondent contended that the computation based on the average base price differed from the allegation of non-reduction of MRP in the notice, that it was denied an effective opportunity to rebut, and that the methodology was not communicated at the notice stage - Whether the investigation and computation based on the transfer price and base price are vitiated for want of notice of the allegation and methodology - HELD - The notice informed the Respondent of the reference and the allegations, and the DGAP did not allege that the MRP was not reduced since it recorded that the MRP is fixed by the Railway Board. The entire computation was based on the transfer price, which the Respondent admitted to be the base price plus taxes, and not on the MRP. The Respondent actively participated in the investigation and produced invoice-wise sales details, returns and sample invoices. The DGAP is not required to communicate the methodology adopted for investigation. Following the Hon'ble High Court of Delhi, no fixed or uniform formula can be laid down for determining profiteering, the authority may adopt a methodology case by case so long as it is fair and reasonable, and comparison of the pre-GST average base price with the post-GST selling price was a correct methodology - The contentions of the Respondent regarding the notice and methodology are rejected - Contravention of Section 171 of CGST Act, 2017 by a Government enterprise supplying packaged drinking water at transfer price while MRP is fixed by the Ministry of Railways - Whether the Respondent has contravened Section 171 by not passing on the benefit of reduction in rate of tax - HELD - The competent authority had granted the Respondent the discretion to fix the transfer price, and the Respondent was required to reduce the transfer price and not the MRP on the reduction in tax rate. Section 171 does not distinguish between complimentary or subsidised supplies or between private and Government organisations, and the Respondent as a registered person filing returns and collecting tax is bound by the Act. The price of the product forms part of the fare collected from passengers of premium trains. The Respondent accepted the bids of the public private partnership plants and sold the product to licensees at the same price, hence all plants were rightly considered. Following the Hon'ble High Court of Delhi, costing and market factors are irrelevant as the authority only examines whether the reduction in tax rate has been passed on by commensurate reduction in price, and any offsetting cost must be established on a cogent basis. The Respondent never reduced its basic prices commensurately after 01.07.2017 - Profiteering is established and the Respondent has contravened Section 171. The DGAP report is accepted and the Respondent is directed to deposit the profiteered amount in the Central and State Consumer Welfare Funds in equal ratio - Period of investigation under Section 171 of CGST Act, 2017 where no limitation is prescribed - The DGAP investigated the period from the date of implementation of GST up to May 2020 in respect of non-passing on of the benefit of reduction in rate of tax - Respondent contended that the investigation cannot go beyond one year, being the Financial Year 2017-18, since a reasonable period is implied in the law and costs were volatile during the period - Whether the investigation by the DGAP for the period beyond one year is impermissible - HELD - Section 171 does not prescribe any period of investigation, as conceded by the Respondent, and the reasonable period depends on the facts and circumstances of each case. The date of implementation of GST is the relevant date when the benefit of tax reduction becomes due to the recipients. The period of investigation is determined by the DGAP so that the benefit of tax reduction is extended to the maximum number of recipients - The period of investigation was rightly determined by the DGAP and the contention is rejected - Levy of interest under Rule 133(3)(c) of CGST Rules, 2017 and penalty under Section 171(3A) of CGST Act, 2017 on the profiteered amount for a period commencing before the insertion of the provisions - Profiteering by the Respondent was established for the period from 01.07.2017 to 31.05.2020 - The interest provision was inserted with effect from 28.06.2019 and the penalty provision came into force with effect from 01.01.2020 - Whether interest and penalty are leviable on the profiteered amount - HELD - Interest can be imposed only for the period commencing from 28.06.2019 and not for any period prior thereto, as held by the coordinate Bench of this Tribunal. Since the period of contravention extends to a period after 01.01.2020, the provision for penalty of ten per cent of the profiteered amount under Section 171(3A) is attracted, and no penalty is leviable if the profiteered amount is deposited within thirty days of the order - The Respondent is liable to pay interest at 18% from 28.06.2019 till the date of deposit, the share of the States where State Consumer Welfare Funds are not created is to be deposited in the Central Consumer Welfare Fund, and the penalty at ten per cent shall not be payable if the profiteered amount with interest is deposited within thirty days. [Read less]

2026-VIL-228-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-Profiteering - Disclosure of confidential documents furnished by the Respondent to the DGAP at the stage of adjudication by the Tribunal under Rules 129(5) and 130(1) of CGST Rules, 2017 - Applicant filed a complaint alleging profiteering by the Respondent in a pipeline contract, and the DGAP computed the profiteered amount relying on the documents furnished by the Respondent during investigation - During hearing the Applicant sought production of GST returns, returns of the other registration, annual reports, VAT and ST-3 returns and the electronic credit ledger, contending that it could not respond to the Respondent's challenge to the computation without them, that the documents relate to the past period and have no commercial sensitivity, and that confidentiality is not permanent under the Competition Commission of India (General) Regulations, 2009 - Respondent contended that the documents were furnished under a claim of confidentiality and the Applicant should have approached the DGAP - Whether the Tribunal can direct disclosure of the confidential documents to the Applicant - HELD - Rule 129(5) requires the DGAP to make available the evidence presented by one interested party to the other, but Rule 130(1), by a non obstante clause, overrides it insofar as confidential information is concerned and applies Section 11 of the Right to Information Act, 2005 mutatis mutandis. Under Section 11 the information supplied by a third party as confidential cannot be provided to another party without notice to and hearing of the party who furnished it. Since the Respondent furnished the documents under a claim of confidentiality, disclosure can be considered only within the safeguards of Rule 130(1), and the Applicant by-passed the statutory mechanism instead of approaching the DGAP. The regulations of the Competition Commission of India do not apply notwithstanding Rules 129(5) and 130(1). The correctness of the data and the computation remains open for adjudication, and the Applicant may raise its contentions, including utilisation of credit, through pleadings and oral submissions - The application for production and disclosure of documents is dismissed - Exercise of inherent powers under Rule 10 of GSTAT Procedural Rules, 2025 to direct production of documents in the face of the non obstante clause in Rule 130 of CGST Rules, 2017 - Applicant sought production of documents furnished by the Respondent to the DGAP, contending that the Tribunal may under Rule 10 make such orders as are necessary to meet the ends of justice, and offered an undertaking that the documents would be used only for the present case - Respondent contended that anti-profiteering matters are governed by the special procedure under Rule 126 and the methodology and procedure rules adopted by the Tribunal, so reliance on Rule 10 is misplaced - Whether the inherent powers under Rule 10 can be invoked to direct disclosure of confidential documents - HELD - Following the Hon'ble Apex Court, the inherent power of a court cannot be exercised contrary to or different from the procedure expressly provided, and where specific provisions deal with a topic and exhaust the jurisdiction in relation to the matter, inherent power cannot be invoked to cut across them. Rule 130 of CGST Rules, 2017 contains a non obstante clause governing disclosure of confidential information - The inherent power under Rule 10 cannot be invoked in the existence of the non obstante clause in Rule 130 and the application for disclosure is dismissed. [Read less]

2026-VIL-229-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-Profiteering - Applicability of Section 171 of CGST Act where supplier obtained GST registration after rate reduction following demerger - Respondent supplied modular kitchens and related goods, and contended that it obtained GST registration only from 21.11.2017, that pre-rate-reduction transactions were undertaken by the transferor company, and that Section 171 applies only to transitional contracts, whereas the DGAP relied on a quotation of the transferor and a later invoice of the Respondent - Whether the transactions could be examined under Section 171 of CGST Act in view of the later GST registration and the demerger under the NCLT order, and whether absence of any pre-rate-reduction supply by the Respondent affects such determination - HELD - The date of registration is a relevant circumstance but is not by itself determinative of the applicability of Section 171. The NCLT order treats the income and expenditure of the demerged Home Retail Business Undertaking as that of the Respondent, but it cannot be read in isolation as conclusively fixing the identity of the supplier for each transaction. The question must be decided on the cumulative effect of the demerger arrangement, invoices, registration particulars and pricing documents showing continuity of the business transferred. The absence of a pre-rate-reduction tax invoice in the name of the Respondent is not conclusive against Section 171, as the provision requires the benefit of reduction in rate of tax to be passed on and does not restrict itself to transitional contracts. A quotation, however, cannot by itself establish the price for comparison unless its nexus with the later supply is shown from the record - The objection that the transactions cannot be examined under Section 171 merely because of the later registration is rejected and the issue is decided against the Respondent - Scope of investigation by the DGAP beyond the goods or services covered in the complaint - The Respondent contended that the DGAP exceeded its jurisdiction by examining goods and services beyond the subject matter of the complaint, and that the later inserted Rule 129(5) confines the investigation - Whether the DGAP's investigation is restricted to the specific goods or services identified in the complaint - HELD - Rule 129(2) of the CGST Rules empowers the DGAP to investigate whether the benefit of reduction in rate of tax or of input tax credit has been passed on in respect of any supply of goods or services. Following the Delhi High Court decision, Section 171 is widely worded, the expression 'any' includes some as well as all, and the investigative power is not limited to goods or services in respect of which the complaint is received. The extension of investigation to other supplies does not render it without jurisdiction where the DGAP does not travel outside the statutory purpose of determining whether the benefit was passed on, and the Respondent failed to show otherwise. The subsequent insertion of Rule 129(5) does not alter the scope of power under Rule 129(2) - The objection that the DGAP acted without jurisdiction is not sustainable and the issue is decided against the Respondent - Reliability of methodology for customised and composite supplies after remand by the NAA - The NAA remanded the matter for examination of entries taxed at lower rates, variations in pre and post rate-reduction base prices including a credit note and sale of damaged goods, mismatch in State-wise totals, and the legal identity of the supplier. The Respondent contended that customised modular kitchens supplied for a lump-sum consideration cannot be compared component-wise, that quotations do not evidence the pre-rate-reduction price, and that the DGAP prescribed a methodology contrary to Rule 126 - Whether the customised and composite nature of the supplies, the lump-sum arrangement and the manner of evidencing prices affect comparability, and whether the methodology adopted by the DGAP is sustainable - HELD - No fixed or uniform formula can be laid down for determining profiteering, and the methodology must be fair, reasonable and responsive to the peculiarities of the case. Customised nature of supplies does not by itself exclude them from Section 171. Quotations furnished by the Respondent do not establish the price at which supply was made, and are not taken into account as the DGAP compared the tax invoices issued before and after the rate reduction. The calculation compared base prices exclusive of GST and applied the reduced rate to determine the commensurate price. Entries taxed at lower rates fell within the rate reductions examined. A credit note carried no profiteering, and in the absence of cogent evidence that sales of damaged goods were unrelated to the normal sales, variations in individual transactions do not justify their wholesale exclusion. The mismatch in State-wise totals arose from an inadvertent error in one State figure, which on correction left an insignificant residual difference that is ignored. The contention on Rule 126 has no merit, as Rule 126 empowers the Authority to determine methodology while the DGAP applies it during investigation - The methodology is held to be a permissible basis for determining the benefit to be passed on under Section 171(1) and the issue is decided against the Respondent - Effect of withdrawal of complaint on continuation of proceedings under Section 171 of CGST Act - The Applicant withdrew the complaint after the matter was referred to the DGAP for investigation under Rule 129, and the Respondent contended that no grievance survived - Whether the subsequent withdrawal of the complaint affects the continuation or validity of the proceedings under Section 171 - HELD - Once the matter is taken up under the statutory mechanism and referred for investigation, the proceedings must be examined in accordance with the Act and the Rules. Proceedings under Section 171 are not a purely private dispute depending on the complainant's continued grievance, as the obligation to pass on the benefit is statutory and its compliance is determined by the competent authorities. Anti-profiteering provisions are a consumer-welfare measure, and withdrawal cannot retrospectively invalidate the proceedings already undertaken or extinguish the statutory obligation - The withdrawal does not bring the proceedings to an end or invalidate the investigation, and the issue is decided against the Respondent - Failure to pass on benefit of rate reduction and need for proof of wilful retention - The DGAP determined, on invoice-wise data, the benefit not passed on, while the Respondent contended that earning profit or increase in selling price is not profiteering, that no intention was established, and that input costs, market conditions, demand, supply and labour costs explained the price increase - Whether the Respondent failed to pass on the benefit arising from reduction in rate of tax by commensurate reduction in prices in contravention of Section 171(1), and whether profiteering can be sustained in the absence of proof of wilful retention - HELD - Section 171(1) casts a statutory obligation to pass on the benefit, and the enquiry is directed to the existence and extent of the benefit and whether it was passed on. A finding of intention or wilful retention is not a condition precedent. A mere increase in price or earning of profit, without establishing the quantum of benefit and its non-passing on, is not profiteering. The presumption that a rate reduction must result in a reduction in prices is rebuttable only by cogent, clear and unequivocal evidence, and the supplier must justify offsetting factors. General assertion of commercial factors without contemporaneous and transaction-specific evidence cannot displace the invoice-wise computation - The Respondent failed to pass on the benefit in contravention of Section 171(1), and the issue is answered in the affirmative - Appropriate [Read less]

2026-VIL-226-GSTAT-DEL-NAPA | Tribunal SGST

GST - Anti-Profiteering - Determination of profiteering under Section 171 of CGST Act, 2017 on the basis of actual savings against actual expenses in real estate project where cost escalation exceeds additional ITC - Complaint alleged that the Respondent, a real estate developer, did not pass on the benefit of ITC to the flat buyers by way of commensurate reduction in prices after introduction of GST - Whether the Respondent has contravened Section 171 of the CGST Act, 2017 by not passing on the benefit of ITC - HELD - Profiteering should be calculated on the basis of actual savings incurred by the Respondent against the a... [Read more]

2026-VIL-1185-GUJ | High Court SGST

GST - Services provided by Head Office to branch offices as distinct persons - Non-adoption of cross-charging - Valuation under Rule 28 of the CGST Rules, 2017 where no invoice is issued – Petitioner held ISD registration for its Head Office and separate registrations for branches outside the State. It incurred common corporate expenses and salaries at the Head Office without allocating them to branches by cross-charging, and all expenses were recorded in its books of account - Revenue demanded IGST under Section 74 of the CGST Act on the footing that the services were supplied to distinct persons under Section 25(4) - Whether tax is payable on common expenditure and salaries incurred at the Head Office merely because cross-charging to branches was not adopted, when no tax invoice was issued - HELD - Under Section 25(4) and (5), entities with different registrations are distinct persons, and Entry 2 of Schedule I read with Rule 28 brings supplies between distinct persons into the net of GST. However, the Circulars dated 17.07.2023 and 26.06.2024 clarify that where full input tax credit is available to the branch and the Head Office has not issued a tax invoice, the value of such services may be deemed to be declared as 'Nil' and treated as open market value under the second proviso to Rule 28. Since it was not disputed that no tax invoices were issued, the value of the services is required to be treated as 'Nil' and no tax liability arises - The adjudicating authority referred to the Circulars cursorily and brushed them aside, which shows non-application of mind. The authorities cannot determine the value on a proportionate basis merely because cross-charging was not adopted. The services are input services and the tax paid by the Head Office would be available as credit to the branches under Section 16(1) - The demand is not sustainable on this ground. The petition is allowedrnrn rnrnIssue 2: Invocation of extended period under Section 74 - Requirement of fraud, wilful misstatement or suppression of facts - The extended period was invoked against the Petitioner on the basis of an investigation by the Directorate, on the allegation that without the investigation the facts relating to evasion would not have been known and that the Petitioner deliberately did not adopt cross-charging - Whether Section 74 could be invoked against the Petitioner for not adopting cross-charging - HELD - Except for the observation based on the investigation, nothing was recorded in the show-cause notice or the order-in-original to satisfy the ingredients of Section 74 - Mere exhuming of information by the Directorate without forming any opinion cannot attract Section 74. Even if cross-charging had been adopted, the tax could have been paid by utilising the credit available at the Head Office and the same would have been available as credit to the branches, so the situation would be revenue-neutral. Since the expenditure was recorded in the books, the authorities were aware of the functioning of the Petitioner. Mere failure to adopt cross-charging does not lead to the conclusion of wilful or fraudulent evasion or suppression with intent to evade tax - Section 74 was mechanically invoked without non-application of mind being excluded, the order-in-original is quashed and set aside. [Read less]

2026-VIL-1192-KAR | High Court SGST

GST - Adjudication order passed in the absence of the Petitioner - Another opportunity to respond to the Show Cause Notice - Petitioner contended that the communications were issued to e-mail addresses of the staff of its auditor that changed from time to time and therefore had no effective knowledge of the proceedings - Whether the Petitioner must be given another opportunity before there can be a demand in terms of the impugned adjudication order - HELD - The reasons assigned for non-participation and the Petitioner's case on merits persuade the Court that the Petitioner must have another opportunity before there can be ... [Read more]

2026-VIL-1190-DEL | High Court SGST

GST - Pre-deposit for maintaining appeal under Section 107(6) of the CGST Act, 2017 - Demand towards penalty alone - Show Cause Notice issued prior to the amendment effective from 01.10.2025 - Petitioner assailed the Show Cause Notice, the Order-in-Original and the rectification order for the Financial Year 2018-2019, which culminated in the imposition of penalty - Whether the Petitioner is entitled to the benefit of Gaurav Jain in relation to the requirement of pre-deposit under Section 107(6) - HELD - Having regard to the nature of the liability imposed upon the Petitioner, namely a demand towards penalty alone, and the fact that the SCN was issued prior to the amendment which came into effect on 01.10.2025, the Petitioner is entitled to the benefit of the judgment in Gaurav Jain. The requirement of pre-deposit for maintaining the statutory appeal shall accordingly be governed by the principles laid down in the said judgment. The finding is confined to Section 107(6) of the CGST Act - The Writ Petition is disposed of - Service of adjudication order and limitation for filing appeal - Relegation to statutory appellate remedy - Petitioner contended that it acquired knowledge of the Order-in-Original only on a later date upon accessing the GST portal - Whether the validity of service, the date of communication and the computation of limitation can be examined in the writ petition despite the availability of a statutory remedy of appeal - HELD - It is not in dispute that a statutory remedy of appeal is available. The rival contentions on the modes of service, the material in support of service, the date of knowledge, the effect of uploading the omitted pages and the computation of limitation can appropriately be examined by the competent Appellate Authority. The applicability of Luxmi Traders would have to be considered in the context of the actual mode of service adopted, in view of the specific assertion of the Respondents that the order was sent through the GST portal as well as by e-mail and Speed Post. No conclusive finding is returned on these questions, and the Petitioner is at liberty to raise all legally available grounds, the Appellate Authority shall consider it in accordance with law - The Writ Petition is disposed of [Read less]

2026-VIL-208-GSTAT-AGR | Tribunal SGST

GST - Penalty on Undeclared Goods Found in Transit - Applicability of Maruti Enterprises to goods claimed to be destined outside the State - Physical verification revealed a substantial quantity of makeup accessories and other goods for which no invoice, bilty or e-way bill was produced - Notice in Form MOV-07 was issued, and about a week later an advocate produced additional bilties and invoices claiming that the goods were moving from Delhi to Gwalior - The Mobile Squad Officer declined the documents because neither the buyers nor the sellers appeared, and no registration particulars or other evidence of identity or genuineness was furnished - Appellant contended that the second bundle of documents was inadvertently not produced at interception, and that the transit State officer had no jurisdiction in view of Maruti Enterprises v. State of U.P. - Whether the additional invoices and bilties produced long after interception established the genuineness of transportation, and whether the principle laid down in Maruti Enterprises applies to the facts of the case - HELD - The mere assertion that documents were available in a separate bundle does not establish that the goods found during physical verification were covered by those documents – Further, the absence of buyers and sellers by itself may not invariably be sufficient to reject a transaction. However, when it is considered together with non-production of documents at interception, delayed submission of additional documents, failure to establish identity and business credentials, discrepancies in multiple invoices of small individual values and absence of any person claiming ownership, the circumstances collectively cast serious doubt on the explanation offered - Appellant failed to establish a reliable documentary link between the additional documents and the goods found undeclared. Maruti Enterprises case, which holds that officers of a transit State are empowered only to intercept and verify goods and to intimate the origin or destination State, is distinguishable. In that case the relevant documents were available at the time of transportation, the buyers and sellers were registered dealers who acknowledged the transactions, and the destination outside the State was identifiable. In the present case, the goods were totally undeclared, and transportation of undeclared goods through a transit State may cause a tax effect in that State - Appellant cannot claim the benefit of an out-of-State destination without first establishing the factual basis of that claim bona fide - The second appeal is dismissed and the order of the FAA affirming the penalty is upheld [Read less]

2026-VIL-1183-TEL | High Court SGST

GST - Jurisdiction of officer to issue show-cause notice and adjudicate penalty proceedings under Section 122 - Proper officer for imposing penalties - Section 160 of CGST Act - Petitioner was subjected to investigation for issuing invoices without actual supply of goods. A show-cause notice was issued by the Additional Director of the investigating Directorate, and the Joint Commissioner passed the order-in-original imposing penalties under Sections 122 and 125. Both were issued prior to the Board's Circular assigning the functions of proper officer under Section 122 - Petitioner contended that no proper officer was assig... [Read more]

2026-VIL-1195-HP | High Court SGST

GST - Validity of SCN issued on the basis of Rule 89(4B) of CGST Rules, 2017 omitted without any saving clause - Petitioner challenged the SCN issued on the basis of Rule 89(4B) of the CGST Rules, 2017 - Whether an SCN issued on the basis of a Rule omitted without any saving clause is sustainable - HELD - The Respondents submitted that the process leading to the SCN was initiated and completed before the omission but could not demonstrate that the Rule was in the rule book on the date of issuance of the SCN - The Hon'ble Supreme Court has held that the effect of omission of a rule is to obliterate it from the statute book ... [Read more]

2026-VIL-34-AAAR | AAAR SGST

GST – West Bengal AAAR - Scope of appellate jurisdiction under Sections 100 and 101 of the CGST Act, 2017 - Appeal cannot be decided on a materially altered factual matrix introduced at the appellate stage - Appellant, a manufacturer of soap bars weighing less than 500 grams marketed as laundry soap, sought a ruling on the applicability of the 5% rate under Sl. No. 251 of Schedule I. The AAR classified the product as laundry soap under tariff item 3401 19 42 and held it taxable at 18% GST under Sl. No. 66 of Schedule II - In the appeal, the Appellant produced a fresh test report obtained after the ruling, relating to a sample described merely as a brand soap, along with another soap bar in newly introduced packaging bearing the expressions Wash and Bath and Transparent Soap and no longer bearing the words Laundry Soap - Whether the appeal can be decided on the subsequently produced soap, its revised packaging and the fresh test report - HELD - The differences between the two products are not confined to the wrapper but are also discernible in description, labelling and physical appearance. The record contains no batch records, manufacturing formulae, raw-material particulars, specifications or comparative test results to establish that the composition and essential characteristics remained unchanged - The test report does not mention the batch number, the date of manufacture, the description on the wrapper or any other identifying particulars. In the absence of a documented link between the tested sample and the original product, the report cannot establish the identity or equivalence of the two products. An appeal under Section 100 lies against the Advance Ruling pronounced under Section 98(4), and under Section 101(1) the Appellate Authority may pass such order as it thinks fit, confirming or modifying the ruling appealed against. The jurisdiction relates to the ruling actually pronounced and the factual foundation on which it was rendered, and it does not contemplate the exercise of original jurisdiction over a materially different product - The subsequently produced soap, its revised packaging and the fresh test report introduce a materially altered factual matrix, and the classification and rate of tax applicable to that product do not fall for determination in the appeal. The Appellant may pursue such remedy as is available under law on the basis of a complete and consistent disclosure - The Appellate Authority refrained from examining the impugned ruling on merits. The appeal is rejected [Read less]

2026-VIL-1184-BOM | High Court SGST

GST - Limitation for appeal under Section 107(1) of the CGST Act, 2017 - Communication of adjudication order uploaded under 'Additional Notices and Orders' tab of GST portal - Adjudication order was uploaded on the portal under the 'Additional Notices and Orders' section instead of the 'View Notices and Orders' section, the Petitioner claimed to have become aware of it only later - The appeal filed thereafter was rejected by the first Appellate Authority as time-barred -Whether upload of the order under the 'Additional Notices and Orders' tab amounts to communication for the purpose of Section 107(1) - HELD - Section 107(1... [Read more]

2026-VIL-1778-CESTAT-DEL-ST | CESTAT SERVICE TAX

Service Tax - Refund of tax with interest - Reference to Larger Bench on rate and commencement of interest under Sections 11B and 11BB of the Central Excise Act, 1944 - Appellants, claiming interest on refund of amounts deposited during investigation, relied on decisions awarding interest at 12% from the date of deposit, while the Revenue relied on a recent decision of a coordinate Bench allowing interest only at the notified rate of 6% only after expiry of three months from the receipt of the refund application - Whether interest on refund is payable at 12% or at the notified rate of 6%, and whether it runs from the date of deposit or after three months from the date of receipt of the refund application - HELD - Section 11BB provides for interest on delayed refund only after expiry of three months from the date of receipt of the refund application, at the rate fixed by notification, which is 6%. Division Benches of the Tribunal have taken contrary views, some awarding interest strictly per the statute and others awarding 6% to 12% from the date of deposit contrary to the express statutory provisions - The Supreme Court and High Courts have allowed interest at 6% as provided in the statute, and where relief was otherwise granted by them, it was in writ jurisdiction on the facts of those cases. The Tribunal, being a creature of statute, derives its powers from the statute and does not exercise the constitutional powers of a High Court or the Supreme Court to go beyond the statute - Since the matter has been decided contrarily by two Benches of higher strength, the controversy requires resolution by a still larger Bench on the issue of refund of self-assessed voluntary payments and involuntary deposits, covering the applicability of Section 11B and the law of limitation, availability of interest under Section 11BB where refund is claimed beyond Section 11B, the relevant date for interest, the applicable rate, the distinction between voluntary and involuntary deposits, the power of the Tribunal to apply equity beyond the statute, and the grant of interest under the Tribunal’s procedural rules - Issues referred to the President for constitution of a Larger Bench – Ordered accordingly [Read less]

2026-VIL-1194-TRI | High Court SGST

GST – Appeal, Service of Order/Notice - Limitation and condonation of delay - Service of order by mere uploading on the common portal under Section 169 of the CGST Act - Whether uploading of the order on the common portal amounts to valid communication so as to start the limitation period for filing an appeal under Section 107, and whether the delay in filing the appeal is liable to be condoned - HELD - Section 169 prescribes various modes of service and gives the Department a choice of the mode. Whenever administrative power is conferred by a statute, the presumption is that it would be exercised in a manner which is fa... [Read more]

2026-VIL-1782-CESTAT-KOL-ST | CESTAT SERVICE TAX

Service Tax - Taxability of budgetary fund allocation received through NEC by a Government organisation under the Ministry of Water Resources - Appellant, a Government organisation entrusted with conservation and utilisation of water resources, undertook survey and investigation work for a hydro electric project without raising any bill or invoice and received funds from the Ministry of Water Resources through NEC - SCN was issued for the period October 2009 to September 2014 treating the funds received as consideration, and the demand was confirmed with interest and penalty - Appellant contended that the amount is the normal fund granted for carrying on day to day activities and not consideration for any service rendered - Whether the fund allocation received through NEC is consideration for a taxable service - HELD - There is no service provider and service recipient relationship between the Appellant and NEC. The Ministry of Water Resources sends the funds to the Appellant through NEC, hence the amount cannot be taken as consideration received for providing any taxable service - The demand on the fund allocation is set aside - Taxability of services rendered by a Government organisation to NTPC as performance of sovereign function in the light of Circular No. 96/7/2007-ST dated 23.08.2007 - Appellant raised bills on NTPC showing service tax on a part of the services, but the tax charged was not paid on the ground that no service tax was payable - The demand on the amounts received from NTPC was confirmed by the adjudicating authority, and the Respondent contended that similar services rendered by private parties are liable to service tax - Appellant contended that it performs the sovereign function of collecting the amount on behalf of the Government, remits the entire amount to the Government and meets its day to day expenses from funds granted by the Government - Whether the amounts received from NTPC are chargeable to service tax - HELD - The Circular clarifies that activities assigned to and performed by sovereign or public authorities under the provisions of any law are statutory duties, are not services provided for a consideration, and any amount or fee collected in such cases is not consideration for the purpose of service tax. The Appellant is performing the sovereign function of collecting the amount on behalf of the Government and does not retain any amount but remits it to the Government. The Appellant charged service tax initially under the impression that the service was taxable, but the service tax was not paid - The demand on account of transactions with NTPC is legally not sustainable on merits - Invocation of extended period of limitation where a Government organisation entertained a bona fide belief that it performs sovereign function and is not liable to service tax - Appellant, being part of the Ministry of Water Resources, did not pay service tax for the period October 2009 to September 2014 and SCN was issued invoking the extended period - Appellant contended that it carried a bona fide belief that no service tax was payable, that even where tax was charged in some invoices it was not paid on that belief, and that being part of the Government it could have no intention to evade tax - Whether the extended period of limitation is invocable against the Appellant - HELD - The Appellant, being part of the Ministry of Water Resources, could have entertained a bona fide belief that it was performing a sovereign function and was not required to pay service tax. The major portion of the demand is on account of grants given for running day to day activities, and in respect of the NTPC transactions service tax was not collected. The Revenue has not made out any case of suppression on the part of the Appellant - The demand confirmed for the extended period is set aside on account of time bar also and the appeal is allowed with consequential relief, if any. [Read less]

2026-VIL-216-GSTAT-CHE | Tribunal SGST

GST - Bunching of appeals and reckoning of cumulative monetary threshold under Section 109(8) of the CGST Act, 2017 read with Rule 110A of the CGST Rules, 2017 - Eleven appeals, with common Appellant and Respondent, arose from rejection of refund of IGST paid on export of services for different tax periods - Whether the monetary threshold for hearing by a Single Member is to be reckoned cumulatively, and whether a refund claim denied falls within the amounts contemplated by Section 109(8) - HELD - Where the parties and the issue are common across a set of appeals, bunching serves judicial consistency and avoids divergent findings on an identical question, and all eleven appeals having the same parties and the same cause of action, namely denial of refund of IGST on export of services, with distinction only in tax period and quantum, bunching is warranted - The matter can be placed before a Single Member, with the approval of the President, only where two conditions are cumulatively satisfied, namely that the amount involved does not exceed the prescribed limit and that no question of law is involved - For bunched appeals the monetary limit is to be reckoned cumulatively, and the cumulative amount across the eleven appeals exceeds the prescribed limit – Further, independent of the monetary limit, Section 109(8) speaks of the amount of tax, input tax credit, fine, fee or penalty determined by the order appealed against, and a rejected refund claim is not an amount determined against the taxpayer but a claim of entitlement denied to the taxpayer, so that the dispute does not fall within the class of matters contemplated for a Single Member - Appeals ordered to be bunched, and the cumulative amount held to exceed the threshold for hearing by a Single Member – The subject appeals shall be heard together by a Bench consisting of one Judicial Member and one Technical Member (Division Bench) - Ordered accordingly - Question of law under Section 109(8) of the CGST Act, 2017 - Retrospective application of a beneficial amendment to Notification No.15/2018-Integrated Tax (Rate), dated 26.07.2018 - Whether the appeals involve a question of law within the meaning of Section 109(8) - HELD - Whether the amendment to the notification is curative and therefore retrospective, or substantive and therefore prospective, and consequently whether the refund claims for the periods in dispute are governed by the amended or the unamended position, cannot be decided without interpreting the relevant statutory, notification and circular provisions governing processing of refund claims arising from export of services - A question of law encompasses any issue requiring interpretation of legal principles, statute, notification, circular or precedent, and such matters are required to be heard by a Division Bench - Common submission of both Authorised Representatives that a question of law is involved held sustainable - Appeals directed to be heard together by one Judicial Member and one Technical Member (Division Bench). [Read less]

2026-VIL-215-GSTAT-CHE | Tribunal SGST

GST - Scope of expression “question of law” under Section 109(8) of the CGST Act, 2017 where the amount in dispute being less than Rs. 50 lakh - Constitution of Bench for appeal involving detention of goods and proceedings under Section 129 - Appellant-Dept challenged the order of the FAA which had set aside the penalty under Section 129(3) and imposed a lesser penalty under Section 125, in respect of a conveyance carrying goods from one State to another - Appellant contended that no question of law is involved and that the issue is factual, while Respondent contended that the appeal involves question of law - Whether ... [Read more]

2026-VIL-214-GSTAT-CHE | Tribunal SGST

GST - Question of law under Section 109(8) of the CGST Act, 2017 - Constitution of Bench for appeal concerning input tax credit availed in FORM GSTR-3B but not reflected in FORM GSTR-2A - Whether the appeal involves a question of law within the meaning of Section 109(8), having regard to the amount in dispute being within the threshold for hearing by a Single Member - HELD - The controversy turns on Section 16(2)(c), and the questions arising concern the construction of Section 16(2)(c) read with Sections 16(1), 41 and 155 where the recipient holds tax invoices and proof of payment but payment of tax by the supplier is not... [Read more]

2026-VIL-222-GSTAT-RJK | Tribunal SGST

GST - Confiscation under Section 130 - Breach of principles of natural justice - Order of confiscation passed on the same day as the notice in Form GST MOV-10 despite seven days granted for reply - Goods in transit were intercepted and detained under Section 129(1) as no invoice and e-way bill for onward supply was produced, which were generated after interception - Whether the order of confiscation passed on the same day as the notice, when the notice itself allowed seven days for reply, satisfies Section 130(4) read with Section 126(3) of the CGST Act and the principles of natural justice - HELD - Section 130(4) read wit... [Read more]

2026-VIL-1196-DEL-CU | High Court CUSTOMS

Customs - Computation of interest reflected in Customs EDI System on liability arising from confiscation and redemption of goods under Section 125 of Customs Act, 1962 for the period prior to determination of liability by the Order-in-Original - Petitioner filed a Bill of Entry declaring the imported goods as Bitumen, which was assessed, but on examination the goods were found to be Used Oil and were seized, followed by SCN proposing confiscation and penalties - The proceedings remained pending for more than seven years until the Order-in-Original amended the description and classification of the goods, confirmed the duty already paid, allowed redemption on payment of fine and imposed penalties - The Customs EDI System reflected interest charges which continued to increase, computed from the original assessment - Petitioner sought waiver of the entire interest, contending that it cannot be liable for the period during which the goods remained seized and adjudication was pending - Whether interest on the liability arising from confiscation proceedings can be computed from the date of original assessment - HELD - Following the Hon'ble Apex Court, the liability under Section 125(2) arises when the owner exercises the option to redeem and the Department accepts it, the duty is assessed under Section 28, and statutory interest follows once Section 28 applies. The liability arising from confiscation proceedings is distinct from the original assessment of the Bill of Entry, which was based on the declaration of the goods as Bitumen and was followed by examination, seizure and initiation of confiscation proceedings. The consequences of confiscation stood determined only by the Order-in-Original. Interest cannot be calculated for a period during which the liability sought to be subjected to interest had itself not been determined, and the period anterior to determination cannot be treated as delayed payment of the subsequently determined liability. Departmental delay by itself does not extinguish a statutory liability to pay interest, and no blanket waiver can be granted for the period after determination. The EDI System cannot create a liability not authorised by the Act, and the question is one of correct computation - The computation of interest treating the period prior to the date of the Order-in-Original as delayed payment is set aside, the Respondent is directed to recompute interest, if any, from the date of determination taking into account the re-assessment and payments already made, and the petition is partly allowed [Read less]

2026-VIL-33-AAAR | AAAR SGST

GST – Telangana AAAR - Exemption under Sl. No. 3 and Sl. No. 3A of Notification No. 12/2017-Central Tax (Rate) - Recipient condition - Sub-contractor supplying manpower to Principal Contractor – Appellant-sub-contractor engaged for operation and maintenance of water supply projects awarded by the State Government to the Principal Contractor, contended that its supply is a pure service exempt under Sl. No. 3 or a composite supply with goods not exceeding 25% of value exempt under Sl. No. 3A - Whether the services supplied by the Appellant to the Principal Contractor are covered by Sl. No. 3 or Sl. No. 3A of the Notification No. 12/2017-Central Tax (Rate) - HELD - The exemption is conditional, and all the prescribed conditions have to be satisfied. The expression provided to the Central Government, State Government or Union territory or local authority links the exemption to the recipient of the supply. The immediate recipient of the services under the sub-contract is the Principal Contractor and not the State Government or a local authority - The fact that the ultimate project is a Government project does not by itself change the identity of the recipient. The work order shows that manpower was engaged for twelve months with rates quoted per man day excluding GST, and payment was to be released against GST invoice. The supply under the sub-contract is therefore a separate taxable supply, and the Principal Contractor, being a private company, does not fall within the specified class of recipients. Sl. No. 3A likewise requires the composite supply to be provided to the specified recipients, and the basic recipient condition is not satisfied. The description of the activity as pure services or manpower supply does not by itself confer exemption. Even assuming that the supply is a pure service in relation to a function covered by Article 243W or 243G, or a composite supply with goods not exceeding 25%, the recipient condition remains unsatisfied - The supply is not covered by Sl. No. 3 or 3A and is liable to GST at 18%, - The ruling of the lower authority is upheld and the appeal is dismissed - Reliance on a Service Tax circular and judicial precedents to claim exemption for sub-contractor - Express conditions of exemption notification - Appellant relied on Circular No. 147/16/2011-ST issued under the erstwhile Service Tax regime, on State of Andhra Pradesh v. Larsen and Toubro Ltd., and on State of Karnataka v. Taghar Vasudeva Ambrish, which adopted a purposive interpretation of an exemption entry - HELD - The Circular and Larsen and Toubro pertain to the earlier indirect tax regime or to the transfer of property in goods. They cannot override the express conditions of the exemption notification under the GST law. Taghar Vasudeva Ambrish is distinguishable, as it concerned the interpretation of the expression use as a residence in the exemption relating to renting of a residential dwelling, which did not contain a recipient-specific condition - Entries 3 and 3A, in contrast, expressly restrict the exemption to specified services supplied to specified recipients, so the identity and status of the recipient is an essential condition. Following Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company, an exemption notification should be interpreted strictly. Where the words are clear, plain and unambiguous, the said meaning has to be given effect to irrespective of consequences. The Appellant must independently establish that its supply satisfies all the conditions of the relevant entry - The ratio of these decisions cannot dispense with the recipient condition, and the appeal is rejected [Read less]

2026-VIL-1189-DEL-CU | High Court CUSTOMS

Customs - Appointment of Common Adjudicating Authority for all Show Cause Notices arising from a single investigation - Petitioner challenged the Notification appointing a Common Adjudicating Authority in respect of only one of three Show Cause Notices issued pursuant to the investigation by the DRI and sought appointment of a single authority for all three - Whether the Petitioner is entitled to a direction for appointment of a Common Adjudicating Authority for all three Show Cause Notices - HELD - The request for common adjudication is not without basis as there is substantial overlap in the material relied upon, but the three Show Cause Notices have distinct subject matters and arise at different stages, one concerning live consignments intercepted at import, another concerning Bills of Entry of cleared consignments under Section 28(4), and the third concerning equipment found at data centres without import documentation. The principle in Star Delta Exim (P) Ltd. recognises the utility of common adjudication to avoid inconsistent findings, but cannot mean that every notice emanating from a common investigation must be adjudicated by one authority irrespective of the allegations and reliefs proposed. Since two of the three notices were subsequently adjudicated while the petition was pending and the validity of that adjudication is itself under challenge, a direction for common adjudication would displace the adjudication already undertaken and serve no useful purpose - The prayer is declined at this stage without expressing any opinion on the merits of the allegations - The writ petition is dismissed - Adjudication of Show Cause Notices during pendency of writ petition and interim order - Respondent adjudicated two Show Cause Notices at New Delhi while the writ petition for a Common Adjudicating Authority was pending, and the Petitioner contended that this violated the interim order which recorded a prima facie view against multiplicity of adjudication and directed adjournment of the personal hearing before the Commissioner of Customs, Mumbai, and that it had brought this order to the notice of the adjudicating authority seeking deferment - Whether adjudication of the two Show Cause Notices was impermissible on account of the pendency of the writ petition and the interim order - HELD - The observations in the interim order were prima facie observations at an interlocutory stage, and the operative direction was confined to adjourning the personal hearing before the Commissioner of Customs, Mumbai, which did not involve the two notices adjudicated at New Delhi. The order did not expressly stay or restrain their adjudication. The communication of the Petitioner seeking deferment was a circumstance requiring consideration but did not amount to an order of the Court restraining the adjudicating authority - The pendency of the writ petition and the interim order did not render the adjudication without jurisdiction - The writ petition is dismissed - Maintainability of writ petition against consolidated Order-in-Original alleging denial of effective opportunity of hearing in presence of alternative remedy under Section 128 - Whether the Court should entertain the challenge under Article 226 notwithstanding the statutory appellate remedy - HELD - The alternative remedy is not an absolute bar - As the impugned order is a consolidated adjudication against several noticees, setting it aside qua individual petitioners would not be appropriate. The principle that a real and effective opportunity of hearing must be afforded remains undisputed, but its application depends on the factual record, and the objection on limitation requires examination of the notice, transactions and material dates - The challenge is not entertained in writ jurisdiction, the Petitioners are at liberty to avail the statutory appellate remedy and urge all objections including limitation, non-consideration of reply and non-service of hearing notices, without any opinion on merits - The writ petitions are dismissed. [Read less]

More Judgements Home More Judgements